GST issues registers
Primary production industry partnership7. Procedures
7.1.1 Instalment options after the first quarter of an income year
Question:
Can a primary producer become eligible to pay a PAYG instalment amount (PAYG option 1) or a GST instalment amount (GST option 3) after the first quarter of an income year?
Answer:
In most cases no.
Explanation:
PAYG income tax instalments
A taxpayer"s eligibility to pay a PAYG instalment amount is tested on the last day of the first quarter for which the taxpayer has a liability for quarterly PAYG income tax instalments.
For a taxpayer who has a liability for PAYG income tax instalments in the first quarter (July to September) of an income year this means that they must meet the eligibility requirements on 30 September to be eligible to choose the instalment amount method for reporting and paying their PAYG income tax instalments for the income year.
In some cases a taxpayer's liability for quarterly PAYG income tax instalments will start in a later quarter of an income year. This will be the case where the Commissioner has given a taxpayer an instalment rate, and brought them into the PAYG instalments system, in a quarter that is not the first quarter of the income year.
Where a taxpayer's liability for quarterly PAYG income tax instalments starts in a later quarter of an income year, the taxpayer must meet the eligibility requirements on the last day of that quarter to be eligible to choose the instalment amount method for reporting and paying their PAYG income tax instalments.
Example
A taxpayer is notified of an instalment rate on October 10 which means the taxpayer has a liability to pay a quarterly PAYG instalment for the second quarter (October to December) of the income year. The taxpayer must meet the eligibility requirements on 31 December to be able to choose to use the instalment amount method for reporting and paying their PAYG income tax instalments for the income year.
A taxpayer who meets the eligibility requirements at the end of their first quarter may choose to use the instalment method for reporting and paying their PAYG income tax instalments for the income year.
A primary producer who chooses to use the instalment amount method will pay two rather than four instalments in an income year if, on the last day of their first quarter for that income year, they also meet the requirements for being a two instalment payer.
A taxpayer who does not meet the eligibility requirements on the last day of their first quarter but meets the requirements later in the income year will not be eligible to use the instalment amount method for PAYG income tax instalments until the following income year.
GST
A taxpayer"s eligibility to pay GST by instalments is generally tested when lodging its BAS relating to the first quarter (July to September) in a financial year.
For the vast majority of taxpayers this means that they must meet the eligibility requirements before lodging a BAS for the first quarter to be eligible to choose the instalment amount method for reporting and paying their GST.
New businesses however will become eligible to choose the instalment amount method when they have lodged a BAS for two quarters and paid GST to the ATO in the second quarter. This means that a new business"s eligibility to pay GST instalments will be tested when lodging its BAS for the third quarter for which it is required to lodge a BAS.
A primary producer who chooses to use the instalment amount method will pay two rather than four instalments in an income year if, on or before 28 October (or in the case of a new business on or before the due date to lodge its BAS for its third quarter) they also meet the requirements for being a two instalment payer.
A taxpayer who does not meet the eligibility requirements on or before 28 October (or in the case of a new business on or before the due date to lodge its BAS for its third quarter) but meets the requirements later in the income year will not be eligible to use the instalment amount method for GST until the following income year.
© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA
You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).