• 6. Transition to monthly pay as you go (PAYG) instalments for corporate tax entities

    Darryl Richardson outlined the change announced by the Government in October last year that large corporate tax entities would be required to pay their pay as you go (PAYG) instalments monthly. It was subsequently announced in the Federal Budget 2014 that the measure would be extended to all large entities and would be progressively phased in over four years.

    Darryl informed members of the progressive implementation of this change over the next four years:

    • Tranche 1 – from 1 January 2014, corporate tax entities that meet or exceed the $1 billion threshold will be required to pay monthly PAYG instalments;
    • Tranche 2 – from 1 January 2015, corporate entities that meet or exceed the $100 million threshold will be required to pay monthly PAYG instalments
    • Tranche 3 – From 1 January 2016:
      • Corporate tax entities that meet or exceed the $20 million threshold and may be required to pay monthly PAYG instalments
      • All other entities that meet or exceed the $1 billion threshold will be required to pay monthly PAYG instalments
       
    • Tranche 4 – from 1 January 2017, all other entities in the PAYG instalment system that meet or exceed the $20 million threshold may be required to pay monthly PAYG instalments.

    Members discussed the need for flexibility to be built into this system to allow for unplanned events, such as natural disasters, which may impact significantly on revenue. The proposed alternative method of reporting may preclude significant variations of their instalment income being reported if large taxpayers have opted out, for example. Darryl indicated that there is opportunity for members to have one-on-one discussions with the ATO on the change and the transition to the new arrangements.

    Action item:

    03-120813

    Inform LBLG members on consultation outcomes out of session.

    Due date:

    ASAP

    Responsibility:

    LBLG Secretariat

    Darryl Richardson

      Last modified: 29 Nov 2013QC 37942