Business Activity Statement » PAYG Instalments
During the first year of business, the Autralian Tax Office does not
require you to pay your income tax liability until after the
end of the financial year. Once your first tax return is lodged including your business
schedule, the Australian Tax Office will estimate your income tax liability for the next year
based on information included in your tax return lodgement. If the net profit of your business
is $2,000 or more, you will be required to pay PAYG income tax instalments (tax in advance) each
time you lodge an activity statement. If the amount payable based on an estimation of
information included in your last tax return lodged does not match your current activity, the
amount may be varied.
Often this means that in the second year of trading, a business is required to pay PAYG income tax instalments to help cover the income tax liability for the second year of trading, as well as pay the income tax liability from the first year of trading. This can be quite a financial strain!
Echo Tax & Accounting can help you estimate how much to put aside for your income tax liability for the period before you are entered into the PAYG income tax instalment system so that at the end of the financial year you don't receive a nasty shock.
NB: Depending on whether you trade as a sole trader, partnership, company or trust -- the instalments may belong to either individual(s) or to the entity.
Often this means that in the second year of trading, a business is required to pay PAYG income tax instalments to help cover the income tax liability for the second year of trading, as well as pay the income tax liability from the first year of trading. This can be quite a financial strain!
Echo Tax & Accounting can help you estimate how much to put aside for your income tax liability for the period before you are entered into the PAYG income tax instalment system so that at the end of the financial year you don't receive a nasty shock.
NB: Depending on whether you trade as a sole trader, partnership, company or trust -- the instalments may belong to either individual(s) or to the entity.