A New Tax System (Tax Administration) Act 1999 (179 of 1999)

Schedule 10   Pay as you go (PAYG) system of collecting income tax etc. liabilities

Part 1   Amendment of the Taxation Administration Act 1953

18   At the end of Division 45 in Schedule 1

Add:

Subdivision 45-M - How amount of quarterly instalment is worked out on basis of your estimate of your benchmark tax

Table of sections

45-410 Working out amount of instalment

45-415 Estimating your benchmark tax

45-420 Credit in certain cases where amount of instalment is nil

45-410 Working out amount of instalment

(1) For the purposes of paragraph 45-112(1)(b) or (c), the amount of your instalment for an *instalment quarter in an income year is:

(a) the amount worked out, in accordance with this section, on the basis of the estimate of your *benchmark tax for that income year that section 45-415 requires to be used, if that amount is positive; or

(b) otherwise - nil.

Note: If the amount is negative, you can claim a credit under section 45-420.

First instalment quarter

(2) If the *instalment quarter is the first in that income year for which you are liable to pay an instalment, the amount is 25% of the estimate of your *benchmark tax.

Second instalment quarter

(3) If the *instalment quarter is the second in that income year for which you are liable to pay an instalment, the amount is worked out by subtracting:

• the amount of your instalment under section 45-112 for the earlier *instalment quarter in that income year;

from:

• 50% of the estimate of your *benchmark tax.

Third instalment quarter

(4) If the *instalment quarter is the third in that income year for which you are liable to pay an instalment, the amount is worked out using this method statement.

Method statement

Step 1. The total of your instalments under section 45-112 for earlier *instalment quarters in that income year is subtracted from 75% of the estimate of your *benchmark tax.

Step 2. If you were entitled to claim a credit under section 45-420 for the second of those earlier *instalment quarters, the amount of the credit is added to the step 1 amount.

Fourth instalment quarter

(5) If the *instalment quarter is the fourth in that income year for which you are liable to pay an instalment, the amount is worked out using this method statement.

Method statement

Step 1. The total of your instalments under section 45-112 for earlier *instalment quarters in that income year is subtracted from the estimate of your *benchmark tax.

Step 2. For each credit that you were entitled to claim under section 45-420 for any of those earlier *instalment quarters, the amount of the credit is added to the step 1 amount.

45-415 Estimating your benchmark tax

(1) If you choose under paragraph 45-112(1)(b) to work out the amount of your instalment for an *instalment quarter in an income year on the basis of your estimate of your *benchmark tax for that income year, you must make the estimate on or before the day on which the instalment is due (disregarding subsection 45-112(3)).

(2) Having done so, you must use that estimate to work out the amount of that instalment. (You cannot later make another estimate for working out that amount.)

Note: If your estimate leads you to pay an instalment that is too low, you may be liable to general interest charge under section 45-232.

(3) The Commissioner must also use that estimate to work out under this Subdivision the amount of each instalment:

(a) that you are liable to pay for a later *instalment quarter in that income year; and

(b) whose amount he or she must notify to you under paragraph 45-112(1)(c);

unless a later application of this subsection requires him or her to use a later estimate you make under subsection (1) of this section.

Note: This means that if an estimate you have made is not appropriate for a later instalment quarter in the same income year, you should choose under paragraph 45-112(1)(b) to work out the amount of your instalment for that later quarter on the basis of a new estimate under this section. If the instalment that the Commissioner works out on the basis of the earlier estimate is too low, you may be liable to general interest charge under section 45-232.

45-420 Credit in certain cases where amount of instalment is nil

(1) You are entitled to claim a credit if the amount of your instalment for an *instalment quarter (the current quarter ) in an income year is nil because the amount worked out for the current quarter in accordance with section 45-410 is negative. The amount of the credit is equal to that amount, expressed as a positive amount.

(2) A claim for a credit must be made in the *approved form on or before the day on which the instalment for the current quarter is due.

Note: How the credit is applied is set out in Division 3 of Part IIB.