Claiming income tax account and pay as you go instalment credits
To avoid delayed refunds it is important to understand if and where you should claim income tax account (ITA) credits and pay as you go (PAYG) instalment credits on your client's tax return.
The following information will help you determine what credit you can claim on a tax return and at which label.
Income tax account (ITA) credits
ITA credits can appear on your client's account at any time and arise from events such as:
general interest charge (GIC) remissions
overpayments
early payments of tax liabilities.
ITA credits must not be claimed on a tax return, as they are automatically added back when a return is processed. This applies to all types of tax returns.
An ITA credit on a tax return will cause the return to stop processing and require manual correction.
Pay as you go (PAYG) instalment credits
PAYG instalment amounts must only be recorded on the calculation statement at:
Label T in company returns
Label G in super fund returns.
They must not be included on individual, trust or partnership tax returns.
PAYG instalment amounts are automatically refunded. For company and super fund returns, this occurs irrespective of the amount included at Label T or G (with the exception of certain consolidated company tax returns).
PAYG instalment credit calculation
PAYG instalment credit calculation amounts for the year can cause confusion.
We use the amount declared on an activity statement as the basis for the PAYG instalment credit, not the corresponding payment amount.
You should use the amounts declared at labels 5A less 5B on the activity statement for your client's tax return Label T or G claim.
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