The Inspector-General of Taxation, Ali Noroozi, has just released his review into aspects of the pay-as-you-go (PAYG) instalments system that have come to be viewed as less-than-helpful by many participants and associated stakeholders.
The IGT’s review into the PAYG instalments system was conducted largely in response to feedback drawn from the IGT’s complaint handling service since May 2015. It says it has taken this amount of time to get sufficient complaint investigation data on which to act, but that it is the first such review undertaken in direct response to taxpayer complaints.
Subsequent IGT consultation also drew on input from tax practitioners, their representative bodies and also individual taxpayers who had experienced directly the aspects of the PAYG instalment system that were of concern.
What has been revealed as the major underlying source of such concerns is the accounting systems employed by the ATO. “Symptoms raised by stakeholders included the non-receipt of ATO communications and consequential issuing of multiple activity statements for past periods as well as unnecessary debt collection action whilst the ATO manually ‘washed up’ duplicated liabilities,” the review says.
Also raised as an issue that needs addressing was the ATO’s entry criteria for individuals entering the PAYG instalment system, administration of penalties and interest, and that statutory income was included when calculating the instalment rate.
One recommendation the IGT has made, which is being considered by the ATO, is for the development of additional system functionality that would allow tax and BAS agents to voluntarily enter clients into (or exit them from) the PAYG instalment system through their own practice management software.
At present, the ATO automatically withdraws the instalment rate notice or exits individual taxpayers from the PAYG instalment system if, for example, the taxpayer no longer meets the entry criteria. Taxpayers can also make a request to exit if their circumstances change, for example if they cease earning investment income. However where the ATO processes such a request, the taxpayer is still required to report and pay any outstanding activity statements that have already been issued.
Click the following to read the full document “Review into Aspects of the Pay As You Go Instalments System”.
An interesting detail unearthed by the IGT report was the amounts collected via PAYG instalments for a recent financial year, and the entities making those payments. For 2015-16, most instalments came from individuals, but the highest dollar amount was sourced from companies (see table below).
# [ATO], [IGT], [instalments], [PAYG], [review of payg instalments]
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