Expect to see a PAYG Instalment in every quarter-end BAS returns
We have made it to the end of March which represents another quarter down! Earlier this year, we sent an email regarding PAYG Instalments and so to jog your memory we are sending this again.
You should expect to see a PAYG Instalment in every quarter-end BAS returns, it means we are efficient provisioning for future income tax liabilities!
1. Pay As You Go Instalments (PAYGI)
Earlier this year, we sent out an email regarding PAYG installments covering why they occur and how they are calculated. You should expect to see a PAYG installment in your March BAS.
PAYG installments are used to prepay future tax liabilities and are calculated based on your YTD profit.
These installments are mandated by the ATO and penalties will be issued if calculations are not accurate.
By prepaying taxes using PAYG installments, you are not left with a big income tax bill to pay at the end of the year.
They may feel painful at the time but are avoiding income tax shock at the end of the financial year.
2. Fringe Benefits Tax – March lodgement
For most of our VCFO clients, we will be completing FBT returns each March. Fringe Benefits Tax is a liability that arises due to benefits given to employees (including directors) in addition to a wage or salary.
Some examples of FBT are the use of company cars, entertainment expenses such as meals, gifts or staff parties, and other personal expenses such as health care or childcare.
Previously, we have completed this work as part of your year-end work however splitting this out will allow you to cash flow forecast more effectively and also provide you with further insights into your business.
A link to how the amount is calculated is below. It is important to note that while this is an additional lodgement, it does not have an effect on your net tax payable over the course of the financial year.
Calculating FBT liability: https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Calculating-your-FBT/
