POWERED BY MOMENTUM MEDIA
Compliance burden to increase under PAYG instalment reform
Large companies' tax compliance costs will be significantly higher under proposed changes to the tax system that require big tax-payers to submit monthly Pay As You Go (PAYG) instalments, says the Financial Services Council (FSC).
The Government released a consultation paper last October that reformed the timing of large companies' PAYG instalments from quarterly to monthly.
In a submission to Treasury, the FSC said members had advised that increasing the frequency of instalments would create an additional compliance burden due to the differences in large companies between the tax consolidated group and the accounting consolidated group.
Extensive eliminations would be required to the accounting income to ensure the correct tax instalment was reported, according to FSC.
It requested PAYG instalments for large taxpayers remain quarterly, with the quarterly instalment income used as the basis for the next two months' payments.
"This solution would provide the Government with the tax revenue in a timely fashion, whilst reducing the compliance costs for our members," it said.
The FSC also questioned what would happen if a company went into a loss situation.
"If, say, four monthly instalments are paid and then losses start to accrue, will the Government refund excess instalments prior to the lodgement of the Income Tax Return?" it said.
It supported a broader view of the PAYG instalment calculation process to reduce complexity and administrative burdens, saying the system had been changed very little since its establishment in 1999.
"We suggest that companies be provided an alternative, simplified methodology of calculating their PAYG instalment amounts that leverages off other existing accounting and reporting processes," it said.
"One possible alternative would be to base the monthly tax instalments as 1/12th of a company's prior year tax liability, adjusted for inflation or market trends (this could be based on ‘industry codes')," the submission said.
"The amounts paid could then be "trued-up" at each key reporting period (eg, half-yearly), when full "tax effect accounting" processes (reflecting tax timing adjustments) are normally undertaken."
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
APRA should release the data it has collected since 2021 on account-based pension investment returns now, says one of the superannuation sector’s peak associations.
Treasurer Jim Chalmers has announced a suite of new reforms as the government doubles down on its focus on strengthening retirement outcomes.
An independent review of Cbus conducted by Deloitte has deemed that “all existing and new directors” on the fund’s board have satisfied a ‘fit and proper persons test’.
Following Donald Trump’s election victory, US stock markets have started to retreat as investor sentiment begins to cool.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
