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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012464278764

Ruling

Subject: Pay As You Go Instalment

Question 1

Are you entitled to remit Pay As You Go Instalments (PAYGI) on an annual basis?

Answer

As your notional tax as advised by the Commissioner on your PAYGI notice is not less than $8,000 you are not entitled to choose to pay your PAYGI on an annual basis under section 45-140 of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953).

This ruling applies for the following periods:

01/07/2012 to 30/06/2013

The scheme commences on:

01/07/2012

Relevant facts and circumstances

You are currently paying your PAYGI on a quarterly basis.

You have requested to pay your PAYGI on an annual basis instead.

You were advised by the Commissioner of Taxation on 25 October 2012 of the following;

    · Your instalment rate is 22.55%

    · Your instalment amount is $5,029

    · Your notional (estimated) tax on your business and investment income was $17,971

    · You are required to make your PAYGI payments on a quarterly basis.

Relevant legislative provisions

Section 45-15 of Schedule 1 to the Taxation Administration Act 1953

Section 45-140 of Schedule 1 to the Taxation Administration Act 1953

Section 45-205 of Schedule 1 to the Taxation Administration Act 1953

Reasons for decision

Section 45-15 of Schedule 1 to the TAA 1953 states that;

    · The Commissioner may give you an instalment rate from time to time, by giving you written notice of the rate

    · You are liable to pay instalments under this Division if the Commissioner has given you an instalment notice.

As the Commissioner has given you an instalment notice on 25 October 2012 you are liable to make Pay As You Go Instalments (PAYGI) for the 2013 income year.

Section 45-140 of Schedule 1 to the TAA 1953 states that you may choose to pay annual PAYGI instalments instead of quarterly PAYGI instalments if, at the end of the starting instalment quarter the following conditions are met;

    · You are neither registered, nor required to be registered for GST under Part 2-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act); and

    · You are not a partner in a partnership that is registered, or required to be registered for GST, under that Part; and

    · Your most recent notional tax notified by the Commissioner is less than $8,000; and

    · In the case of a company - the company is not a participant in a GST joint venture under Division 51 of the GST Act; and

    · In the case of a company - the company is not part of an instalment group.

You received an instalment notice from the Commissioner on 25 October 2012 that advised that you are required to make quarterly instalments and that your notional tax on your business and investment income is $17,971.

As your notional tax is not less than $8,000 you are not entitled to choose to pay your PAYGI on an annual basis under section 45-140 of Schedule 1 to the TAA 1953.

However, if your circumstances change you may choose to vary your instalment rate. Your instalment rate as advised to you on 25 October 2012 by the Commissioner was 22.55%.

Section 45-205 of Schedule 1 to the TAA 1953 states that you may choose an instalment rate for working out the amount of your instalment for an instalment quarter in an income year.

If you choose another instalment rate you must use that instalment rate to work out your instalment for that quarter and must continue to use that instalment rate for subsequent quarters in that income year unless you choose another instalment rate.

Section 45-210 of Schedule 1 to the TAA 1953 states that if you do choose another instalment rate you must notify the Commissioner of the new instalment rate. This notification forms part of the Instalment Activity Statement and must be notified on or before the due date for payment of the instalment.

Penalties may apply under section 45-230 of Schedule 1 to the TAA 1953 where the varied instalment rate is too low. You may be liable to pay the General Interest Charge if any of the following conditions apply;

    · You vary your rate downwards and your varied instalment amount is based on estimate that is less than 85% of the actual tax payable on your business and investment income

    · Your varied rate is less than 85% of the instalment rate that you should have applied

    · You vary your instalment amount to zero but have business and investment income for the year and tax payable on this income.


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