Written by: Jason Holt, Senior Associate Accountant
Did you know if you receive a tax debt over $1000, you may be required to pay this through quarterly instalments, also known as PAYGI (Pay As You Go Instalments).
PAYGI (Pay As You Go Instalments) is a system that is automatically set up by the Australian Taxation Office (ATO), designed to address tax debts exceeding $1,000, providing individuals with a strategic approach to manage and eliminate their financial obligations. This innovative system is a proactive measure by the ATO, aiming to predict and prevent future tax debt issues by leveraging past financial data.
How does it work?
By entering individuals into this system, the ATO encourages them to make regular contributions towards their anticipated tax liabilities. The goal is to offset any future tax debt, effectively zeroing out the outstanding amount when the individual completes their subsequent tax return. This approach aligns with the ATO’s strategy of learning from historical patterns and assuming that similar financial situations will reoccur.
Scheduled payments are expected to be made every quarter (September, December, March and June). While individuals have the option to adhere to the suggested payment amounts, they also have the flexibility to adjust the payment figures based on their financial circumstances. This adjustment can range from zero to the specified amount, and individuals can modify their payment commitments for each quarter. However, any alterations must be made before the issuance of the next payment request.
Can I opt out?
Unfortunately, you cannot remove yourself from this system, it is automatic and will only allow you to exit once you receive a tax refund. If payments are neglected, the ATO will assume compliance, credit the individual with the specified payment amounts, and deduct the credited amount from any future tax refund. This may potentially leave the individual with a reduced or no refund.
Have Questions?
If you are entered into this system, it is important not to ignore it. Contact our team of Accountants to assist and guide you through the intricacies of the ATO’s automated tax debt management system.
Disclaimer:
The information contained in this article is for general informational purposes only and is not intended to provide legal advice or substitute for the advice of a professional. This information does not consider your personal circumstances and may not reflect the most current legal developments. Should you need advice, please contact our firm for targeted information relating to personal your situation.
Greenhalgh Pickard’s Accounting Team
