There are many things about running a business that are more exciting than an instalment activity statement, but nonetheless they are crucial for compliance.
A lot of our clients receive instalment activity statement and don’t know what to do with them – so if that is you and you’re reading this, you’re not alone.
What is it?
An installment activity statement is a document the Australian Taxation Office (ATO) issues for the prepayment of tax.
By completing your installment activity statement, you are able to make pay as you go (PAYG) instalments.
You should lodge your instalment activity statement and PAYG instalments prior to tax returns being lodged. By doing this, you ensure that payments made during the year are accounted for.
Once you’ve lodged your previous year’s tax return, the tax office will enter you into the system automatically.
What do I do if I have received an instalment activity statement?
Firstly, make sure that all your records and information are up to date.
It is crucial that prior to completing your instalment activity statement, all your record keeping is organised and current. This is when maintaining good business systems all year round pays dividends.
There are two ways to complete instalment activity statements.
The first is to simply use the rate provided by the ATO for you on the form as your PAYG instalment.
The second way requires a bit more work, but could put you in a more tax-favorable position, and that is to vary your installment amount.
If you choose this second option it can get a bit complicated, and we recommend seeing the advice of a professional, as factors such as changing investments, business structures not continuing, changes in trading conditions, business restructuring, change in relevant legislation, markets changing, income tax losses and consolidations come into play.
From there, you basically sign the form off and you send it off to the tax office for lodgment.
You then also need to make sure that you’ve paid the amount of the installment to the tax office by the due date. If you fail to do so, you may end up in default with the ATO.
If you would like any assistance with your instalment activity statement, please do not hesitate to reach out.