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Intuit

Reporting PAYG Instalments on BAS and IAS

Please Note: In March 2018 QuickBooks will start rolling out a new GST experience. This will happen gradually over a period of time. If you can see the View reports menu when you are on the GST centre main page, you are in the classic experience, and if you can see Run Reports menu, you are on the new experience.

What are PAYG Instalments?

Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability.

PAYG instalments are typically reported and paid to the ATO on a quarterly (BAS) or monthly (IAS) basis, the frequency of which is determined by the ATO based on your annual business income.

The ATO will let you know if you need to start paying by instalments under the PAYG instalment system, and before your PAYG instalments are due, they will send an activity statement or instalment notice, depending on your circumstances.

PAYG Instalments are not calculated by QuickBooks, only reported on the business or instalment activity statement.

For more information about PAYG instalments, please consult a tax advisor and/or explore the ATO website links below:

https://www.ato.gov.au/General/PAYG-instalments/
https://www.ato.gov.au/General/PAYG-instalments/Calculating-the-amount-you-pay/
https://www.ato.gov.au/general/payg-instalments/how-to-vary-the-amount-you-pay/

Reporting PAYG Instalments in the Classic Experience

When you select your PAYG instalment method in Edit GST Settings, your BAS form will include the PAYG income tax Instalment section on your BAS, and PAYG tax income tax instalment lines under Amounts you owe the tax office and Amounts the tax office owes you.

Values input under the PAYG income tax instalment sections will show figures on your BAS form, but will have no accounting impact post lodgement. You will need to record an adjustment to increase or decrease the balance transferred to BAS suspense upon lodgement.

Any adjustments created will be listed in the related section of the GST Detail report for that period. Adjustment transactions cannot be changed, only deleted.

Option 1 (by instalment)

Under PAYG income tax instalment (Option 1), first input your PAYG instalment (copy from BAS) amount provided to you by the ATO, but remember that this input does not impact the books or BAS calculation.

To report your PAYG instalment on your BAS using the instalment method, record an adjustment on line 5A by clicking the blue Record link on the far right down under Amounts you owe the tax office. Input the amount owed in Adjustment amount, select your Adjustment account, check the Adjustment date and add any memo details as required. Once you Save the adjustment, the amount you owe will then display on your BAS.

If you need to report a variance to what the ATO is expecting, under PAYG income tax instalment (Option 1), input your Estimated tax for the year, your Varied amount for the quarter​ and your Reason code for variation (refer list of codes), but again remember that these inputs do not impact the books or BAS calculation. To actually claim the variance you must record an adjustment on Line 7C under Amounts the tax office owes you.

When you mark your BAS as lodged, QuickBooks will post any instalment amounts owed against the BAS Suspense account.

Option 2 (by income tax rate)

Under PAYG income tax instalment (Option 2), input your PAYG instalment income, the ATO instalment rate (provided to you by the ATO), and manually calculate your line T11 amount to determine the total instalment owed to the ATO.

To report your PAYG instalment on your BAS you will then record an adjustment on line 5A by clicking the blue Record link on the far right down under Amounts you owe the tax office. Input the amount in Adjustment amount, select the Adjustment account, check the Adjustment date and add any memo details as required. Once you Save the adjustment, the amount you owe will then display on your BAS.

If you need to report a variance to what the ATO is expecting, under PAYG income tax instalment (Option 2), fill out New varied rate (enter percentage) and Reason code for variation (refer list of codes), but remember that these inputs do not impact the books or BAS calculation. To actually claim this variance you must record an adjustment on Line 5B under Amounts the tax office owes you.

When you mark your BAS as lodged, QuickBooks will post any instalment amounts owed against the BAS Suspense account.

Reporting PAYG Instalments in the New Experience

In the updated GST experience, when Company Income Tax (PAYG instalments) is enabled in GST Settings, QuickBooks will automatically create a PAYG Instalment Liabilities account, and include PAYGI within your lodgement flow.

If you have Enabled BAS E-lodgement for QuickBooks, your PAYG instalment amount will be downloaded automatically and pre-populated in your lodgement.

Check GST Settings to set your reporting frequency (monthly, quarterly, or annually) and set your reporting method (amount or rate) prior to lodgement.

Instalment Amount Method

To report your income tax instalment using the amount methodinput the amount owed under Income tax instalment amount during the PAYGI filing stage of your activity statement.

Tick the I need to adjust the instalment amount if you need to adjust the figure the ATO is expecting and provide details as to why, or to include credit amounts on your activity statement.

When your activity statement is lodged, QuickBooks will automatically post a journal entry against the PAYG Instalment Liabilities account and the ATO Clearing account.

Instalment Rate Method

To report your income tax instalment using the rate methodinput your Income tax instalment rate and Income for the period figures during the PAYGI filing stage of your activity statement.

Tick the I need to adjust the instalment rate if you are using a rate other than what the ATO is expecting and provide details as to why, or to include credit amounts expected from the ATO on your activity statement.

When your activity statement is lodged, QuickBooks will automatically post a journal entry against the PAYG Instalment Liabilities account and the ATO Clearing account.