It pays to educate clients about PAYG

The Australian Taxation Office said calculating and paying the right instalments can help clients manage a healthy cash flow and avoid a large tax bill when they lodge their next tax return.

Tax agents should inform their clients that will be automatically entered into PAYG instalments if they earnt over the entry threshold in business and investment income in their latest lodged tax return.

If clients are starting PAYG instalments, the ATO said it’s a good time to remind them that they can start making payments once they have been sent a business activity statement (BAS) or instalment notice.

If clients’ current PAYG instalments could result in them paying too little or too much tax for the year, the ATO suggests tax agents talk to them about varying PAYG instalments.

Tax agents can vary clients’ PAYG instalments through their next activity statement when it is available in the practitioner lodgment service practice software or in online services for agents.

However,  variations must be made on or before payment due date. The varied amount will apply for all the remaining instalments unless the tax agent or their client make another variation before the end of the income year. It is important clients do not underestimate their income when they vary their instalments.