Activity statements are the method of reporting GST, PAYG Instalments, PAYG Withholding, Fringe Benefits Tax Instalments and Deferred Instalments to the ATO using a single form.

 

Many clients prepare and lodge their own activity statements and I encourage then to take advantage of the ATO Business Portal for this purpose.  For other clients I am happy to prepare and lodge activity statements using the Electronic Lodgment Service (ELS).  This means that clients can take advantage of lodgment extensions available to tax agents.  This method also provides an enforced regular check-up for business clients.

 

Businesses and individuals pay their income tax on a Pay as You Go (PAYG) basis.  This applies to employees who have tax withheld at source by their employers and it also applies to investors, self employed persons and all other tax paying entities.

 

For employees the PAYG system does not usually involve any reporting other than an annual income tax return, when their employer will supply them with a PAYG Payment Summary (formally known as a Group Certificate).

 

For other taxpayers PAYG is paid on either a quarterly or annual basis and is reported to the Taxation Office using an activity statement.  For entities not registered for GST this is called an Instalment Activity Statement and for GST registered taxpayers it is included on their Business Activity Statement together with other tax obligations for the reporting period.

 

Instalments of tax are paid in advance of the lodgment of a taxpayer’s annual income tax return and the amount paid by way of instalments is then taken into account when determining the final amount owing or refund due.

 

Instalments can be either a fixed amount based on the last income tax return lodged or a percentage of gross income.  I often prefer people to pay their PAYG instalments on the percentage basis as it is likely to be a more accurate estimation of their actual income tax liability.  Instalment amounts can also be varied to take into account changed circumstances.

 

Further information can be obtained from the ATO website -

This is the amount of tax required to be withheld by employers from salaries and wages paid to their employees.  Tax is also required to be withheld when a supplier does not quote an Australian Business Number (ABN).

 

PAYG Withholding is reported to the ATO:-

 

 

The following can be obtained from the ATO website:-