If you have recently lodged your tax return, you may have noticed that the amount on your IAS has changed or you may have received a Quarterly PAYG instalment notice for the very first time.
As an individual taxpayer, you will receive an IAS or Quarterly PAYG instalment notice – this is the way that Pay As You Go Instalment (PAYGI) Tax is paid to the ATO. If you are a business taxpayer, you will see some new boxes at label 5 on your BAS. PAYGI is the method used to collect amounts towards your current financial year tax return.It’s basically prepaid tax in advance. For example, if you receive a Quarterly PAYG instalment notice requesting an amount of $3,000 to be paid then you will receive a credit of $3,000 towards your 2013 tax return.
Once your 2013 tax return is lodged and the credit applied, you will either receive the amount overpaid as a refund or be advised the amount still owed. The PAYGI system has the benefit of reducing the potential for a nasty tax debt at year end.
The PAYGI system is not optional. The ATO select individual taxpayers who have business or investment income of more than $2,000 and had a tax debt of more than $500 in the prior year.If you are requested to pay PAGYI, you will receive a letter outlining the due dates and payment amounts after your tax return is lodged.
I don’t recommend ignoring the statements or PAYGI letters that you receive. Ignoring ATO correspondence such as this usually results in a tax debt. If you have any questions about correspondence that you receive from the tax office, please give the office a call. We’ll be happy to assist you.