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Intuit
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Reporting PAYG Instalments on BAS and IAS

Learn how to report Pay-As-You-Go (PAYG) Instalments on Business Activity Statements (BAS) and Instalment Activity Statements (IAS) in QuickBooks Online.

Note: In March 2018, QuickBooks started rolling out a new GST experience. This happened gradually over a period of time. If you see View reports menu when you’re on the GST centre main page, you’re in Classic Experience. If you see Run Reports menu, then you’re 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:

Reporting PAYG Instalments in the Classic Experience

When you select your PAYG instalment method in Edit GST Settings, your BAS form will include 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.

Under PAYG income tax instalment (Option 1), input your PAYG instalment (copy from BAS) amount provided by the ATO.

Note: This input doesn’t impact the books or BAS calculation.

To report your PAYG installment on your BAS using installment method

  1. Under Amount you owe the tax office, select the blue Record link.
  2. Record an adjustment on line 5A.
  3. Input the amount owed in Adjustment amount.
  4. Select your Adjustment account, check the Adjustment date, and then add any memo details as required.
  5. 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

  1. Under PAYG income tax instalment (Option 1), input the following:
    • Estimated tax of the year
    • varied amount for the quarter
    • Reason code for variation (refer to list of codes)

    Note: These inputs don't impact the books or BAS calculation

  2. To actually claim variance, under Amounts the tax office owes you, record an adjustment on Line 7C. When you mark BAS as “lodged”, QuickBooks will post any instalment amounts owed against the BAS Suspense account.
  1. Under PAYG income tax instalment (Option 2), input your:
    • PAYG instalment income
    • ATO instalment rate (provided by the ATO)
  2. Manually calculate your line T11 amount to determine the total instalment owed to the ATO.

To report your PAYG instalment on your BAS

  1. Under Amounts you owe the tax office, click the blue Record link.
  2. Record an adjustment on line 5A.
  3. Input the amount owed in Adjustment amount.
  4. Select the Adjustment account and check the Adjustment date.
  5. Add any memo details as required.
  6. Once you save the adjustment, the amount  you will then display on your BAS.

If you need to report a variance to what the ATO is expecting

  1. Under PAYG income tax installment (Option 2), fill out:
    • New varied rate (enter percentage)
    • Reason code for variation (refer list of codes)

    Note: These inputs don't impact the books or BAS calculation.

  2. To actually claim variance, under Amounts the tax office owes you, record an adjustment on Line 7C.

When you mark 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.

  1. To report your income tax instalment using the amount method, input the amount owed under Income tax instalment amount during the PAYGI filing stage of your activity statement.
  2. 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.

  1. To report your income tax instalment using the rate method, input your Income tax instalment rate and Income for the period figures during the PAYGI filing stage of your activity statement.
  2. 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.
  3. When your activity statement is lodged, QuickBooks will automatically post a journal entry against the PAYG Instalment Liabilities account and the ATO Clearing account.

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