Edited version of private advice

Authorisation Number: 1052366415972

Date of advice: 26 February 2025

Ruling

Subject: PAYG instalment - imputation system

Question 1

For the purpose of subsection 205-15(1) of the Income Tax Assessment Act 1997, was the PAYG instalment payment made by Company A (the Company) on or before 30 June 2024?

Answer

No.

This ruling applies for the following periods:

Income year ended 30 June XXXX

Income year ended 30 June XXXX

The scheme commenced on:

DDMMYYYY

Relevant facts and circumstances

On DDMMYYYY, the Company lodged its business activity statement (BAS), which reported:

•                     a PAYG instalment payable of $X,

•                     a $X refund in respect of goods and services tax, and

•                     the net amount payable of $X (the BAS payment).

The due date for the BAS payment was DDMMYYYY.

Although sufficient funds to pay the PAYG Instalment were available for over six months prior to the payment due date, the process of making the payment was delayed for various reasons.

An amount of $X was received by the Australian Taxation Office on DDMMYYYY, which was credited to the Company's Integrated Client Account, effective that date.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 205-15(1)

Income Tax Assessment Act 1997 subsection 205-20(1)

Reasons for decision

Credits arise in a company's franking account as set out in the table in subsection 205-15(1) of the ITAA 1997, which provides that if a company 'pays a PAYG instalment' a franking account credit arises on the day on which the payment is made. Subsection 205-20(1) of the ITAA 1997 explains the meaning of the term 'pays a PAYG instalment' as follows:

205-20(1) An entity pays a PAYG instalment if and only if:

(a)          the entity has a liability to pay the instalment; and

(b)          either:

(i)           the entity makes a payment to satisfy the liability (in whole or in part), or

(ii)           a credit, or a Running Balance Account (RBA) surplus, is applied to discharge or reduce the liability.

The PAYG instalment payment was received by the Australian Taxation Office and applied to the Company's Integrated Client Account effective from DDMMYYYY. This was the date the payment wholly satisfied the Company's PAYG Instalment liability. The Commissioner has no discretion to treat the Company as having paid the PAYG Instalment on an earlier date.

For the purpose of subsection 205-15(1) of the ITAA 1997, pursuant to subsection 205-20(1):

•                     the Company paid the PAYG Instalment, and the payment was made, on DDMMYYYY, and

•                     the franking account credit in respect of the PAYG Instalment arose on that date.