A PAYG Instalment forms part of a small businesses BAS (Business Activity Statement). But what exactly is a PAYG Instalment? And when do you need to pay it for your business?
What is a PAYG Instalment?
A PAYG Instalment (or Pay As You Go Instalment) is the ATO’s way of making us prepay our income tax during the year for our Business.
When do you pay PAYG Instalments?
When you lodge your Income Tax Return for your small business, any PAYG Instalments paid during the year will be a credit against the Income Tax calculated. So by prepaying your tax it will help to reduce or avoid those lumpy tax payments at the end of the year, which no business wants!
A PAYG Instalment amount is calculated based on your previous tax return lodged. So, if you paid some tax last year for your business, it is likely that you will have to pay PAYG Instalments this year. However, if it is your first year of operation you won’t pay PAYG instalments, as you haven’t lodged your first tax return yet. Also, if your business was in a tax loss position last year, you will not pay tax instalments as the tax payable last year was nil. Continue reading “Tax Tip Tuesday: When do I pay PAYG Instalments for my Business?”
So you have been organised this year and have prepared the Income Tax Return for your small business. Last year was a great year, which means that you are stuck with a tax bill. At first you think lets lodge it on the last day so I can defer paying the tax as late as possible.
