Businesses required to remit Pay-As-You-Go (PAYG) instalments on a quarterly basis are finding the process time consuming and complex, and new options should be considered, CPA Australia says.
Senior taxation consultant Garry Addison says the current system is too restrictive as it allows only a small number of people to use other methods of payment.
The majority of businesses are required to remit PAYG instalments using the instalment-rate method, where the Australian Taxation Office (ATO) notifies a rate and this is applied to the instalment income (generally the total ordinary income in the relevant period).
The other two methods are the notional tax method and the notional tax with GDP-adjustment method.
To further ease the workload, Addison is calling for access for all or most quarterly lodgers to a non-instalment rate method for determining quarterly PAYG payments.
This would entitle them to elect to lodge PAYG using the GDP-adjusted tax method, where the quarterly payment is based on the most recent notional tax adjusted in line with movements in GDP, unless the business chooses to vary that amount.
Addison cautions that any variance in rate must be made carefully as penalties apply to under-payment, just as they do in the instalment-rate system when a business varies a rate and under pays.
The GDP-adjusted method would avoid the time-consuming requirement for taxpayers and/or their advisors to calculate the quarterly instalment because the amount they are required to pay is pre-printed by the ATO on the BAS.
Currently, this option is only available to individuals or trustees paying quarterly -mainly self-funded retirees. It is not available to companies or to taxpayers who are entitled to pay annually.
Addison says a basic distinction is that if the business is in the GST system it can not currently use these methods.
While the matter has been raised with the ATO, they are "a bit hamstrung" as the rules are at policy level and the ATO simply implements them.
The issue will be raised with Treasurer Peter Costello in coming weeks and Addison is hopeful the ATO will also support any change suggested.
He says there is a "reasonably good chance" for change.
"There needs to be a range of changes and we'll be looking at a few of them," he says.
Among these are the suggestions to further streamline the BAS that were detailed by
bizreview earlier this week. See that story
here.