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Pay as you go (PAYG) income tax instaments

PAYG instalments is a system of paying amounts towards your expected end of year income tax liability.  The amounts paid throughout the year will then reduce the income tax liability calculated when your annual income tax return is assessed.

There are generally two options to choose between for calculating and paying your PAYG instalments, however once you choose an option you must continue to use it for the remainder of the financial year.

Option 1 – instalment amount

You pay an amount calculated by the ATO.  This amount is worked out using the business and investment income from your most recent tax return.  It provides a consistent instalment each quarter, which call help you plan and budget for the payment.

If you think that using the pre-printed amount will result in you paying more or less tax than your expected liability for the year, you can vary it.

Option 2 – instalment rate

You work out your PAYG instalment amount based on your actual income multiplied by a rate provided to you by the ATO.  This method may be beneficial if your income fluctuates throughout the year.

Once again, this is calculated using the business and investment income from your most recent tax return and can be varied if you believe it will result in you paying more or less tax than expected for the year.

If you would like to discuss your PAYG instalment obligations or need help varying a PAYG amount, give us call, we’re here to help.

Fringe Benefits Tax (FBT)

The fringe benefits tax (FBT) year runs from 1 April to 31 March, with returns due to be lodged by 21 May (unless you lodge via a tax agent who has been given another lodgement date).

Fringe benefits tax (FBT) is paid on certain benefits employers provide to their employees or their employee’s associates (typically family members)  in place of salary or wages.  The FBT rate may vary from year to year, the current rate is 46.5% but this will increase to 47% for the FBT year ending 31 March 2015.

FBT is separate from income tax and is based on the taxable value of the fringe benefit provided.  Some common examples of fringe benefits are car or other travel benefits, entertainment benefits, financial benefits and accommodation or property benefits.

Employers can generally claim an income tax deduction for the cost of providing fringe benefits and for the FBT they pay.

Are you providing a fringe benefit?

If you are currently an employer the following check-list will help you work out if you are providing a fringe benefit to your employees.

If you answer yes to any of the following questions, you may have to pay FBT.

  • Do your employees take cars home and garage them overnight, even if only for security reasons?
  • Do your employees use cars or other vehicles the business owns for private use?
  • Do you have a salary package arrangement with any of your employees?
  • Have you paid or reimbursed any employees’ expenses?
  • Do you provide entertainment, such as food, drink or recreation to your employees?
  • Have you given property, such as electrical goods, to your employees either free or at a discount?
  • Do you provide any employees with a house or unit of accommodation?
  • Do you provide loans at reduced interest rates to any employees?
  • Have you released any employee from a debt they owed the business?
  • Do you provide any employees with living-away-from-home allowances?

If you are unsure of your FBT obligations or need help calculating the FBT payable for your business, give us a call and we can work through your queries together.

ATO Payment Plans

Lots of us experience times where it may not be possible to pay our bills on time because of financial or other difficulties.  Thankfully the ATO understand this and in most cases are willing to make an appropriate arrangement with you to pay your tax debt off over time.

It is important that you still lodge your BAS on time, even if you don’t think you’ll be able to pay by the due date. Then if you are having trouble paying the debt, call the ATO as soon as possible to explain your circumstances.  They will work with you to see if there’s an alternative way to pay.  If the debt is under $25,000 you can use the 24-hour, automated self-help phone service on 13 72 26 to make a payment arrangement and may not even need to speak to an operator.

Once an arrangement is in place, you will need to pay the instalments on time and also continue to meet any ongoing tax obligations.  This include lodging and paying any future BAS’s on time.

The ATO have release a short video, Stay in control of your business, which explains how they can help if you’re having difficulty paying a tax debt.  Alternatively you can contact us and we’ll work through the options with you.

Xero Touch – Xero on your mobile

Did you know you can now access Xero from your iPhone or Android device? With Xero Touch you can view & reconcile accounts, create & send customer invocies, chase up outstanding invoices, upload reciepts, track expenses and more, all while on the go!  To see how it works watch this new video or visit the Xero Webpage.  Download it free from the app store or go to m.xero.com on your mobile device and tap ‘Login to Xero Touch’.

New Xero Pricing Plans

We have received word from Xero that they are introducing a new pricing structure from December this year.  You can see the new plans on the Xero Website, read more about the thinking behind them on the Xero blog here and here, or look through these FAQs to find suggested answers to all kinds of questions you might have

The new plans are largely based around Payroll and changes should be pretty minimal for most users, making it easier to use the features you need without paying for features you don’t.  So what does this mean for you?  You don’t have to do anything, Xero will automatically move you to the plan that suits you, based on how many employees you paid this month.

The new pricing plans are set to reflect the value Xero have added over the past few years.  They have already introduced hundreds of features to Xero and are still releasing new stuff every few weeks. The primary feature that has been added recently, and in many cases is the difference between the plans, is how much storage is available within Xero for storing electronic copies of documents, such as invoices and statements.

If you need any more information or would like to talk to someone about getting started with Xero, give us a call, we’d be happy to help you out.

Older Posts:

22/11/2013 - Fuel Tax Credits

17/10/2013 - Superannuation for employees

09/10/2013 - Understanding Depreciation

02/10/2013 - Steps to finding & starting a new employee

12/09/2013 - June BAS & Converting to Xero

29/01/2013 - Sunshine Coast Floods

16/01/2013 - December BAS Extension

08/01/2013 - Mobile Website Development

26/11/2012 - BAS Extension

19/11/2012 - Unpaid Employee Superannuation

08/10/2012 - Xero vs Saasu

10/09/2012 - Keep your paperwork!!

30/07/2012 - Service Menu – Revised Pricing

09/07/2012 - Payment Summaries

27/06/2012 - New Financial Year – Award Changes

21/06/2012 - Xero vs Saasu – Make the switch for EOFY

04/06/2012 - March 2012 BAS’s and ATO Crackdowns

28/04/2012 - Google’s ‘Penguin’ Update

23/04/2012 - Payroll

17/04/2012 - Xero Accounting Software

28/03/2012 - Handy Tools for Small Business – Software

27/03/2012 - Work Opportunity – Noosa Retail

26/03/2012 - Handy Tools for Small Business – Websites

14/03/2012 - HDR Photography

07/03/2012 - What if geography wasn’t an issue?

29/02/2012 - Cloud Accounting Software – Xero and Saasu

28/02/2012 - Superannuation Clearing House

27/02/2012 - BAS Extensions, FBT Returns

03/02/2012 - Budget Management

12/01/2012 - New Year, New Lens, GST Registration

20/12/2011 - Happy Holidays!

11/12/2011 - Xero Certification

28/11/2011 - September Quarter BAS’s & Christmas Break

07/11/2011 - BAS Agent Registration

07/10/2011 - New Baby!

05/10/2011 - Website Slider

03/09/2011 - Our Honeymoon