Payment of GST
Pay As You Go (`PAYG') tax collections mechanism
Payment of GST
Pay As You Go (`PAYG') tax collections mechanism
The `net amount' is the
difference between
the GST payable on taxable supplies attributable by the entity to the tax period and
any input tax credits attributable to the same tax period.
The net amount can be increased or decreased by adjustments for the relevant tax period. (The net amount does not include GST paid on taxable importations as these were paid at the time of importation.)
For example, Michael operates a shoe shop and is registered for GST. The total amount of GST payable for the tax period is $2,000. Input tax credits for the same tax period are $1,200. Michael has an increasing adjustment of $100 for this period.
Michael will account for a net amount of $800 ($2,000 less $1,200) before adjusting the amount recorded on his activity statement (see below) by the $100 increasing adjustment.
The amount to be remitted on his activity statement will be $900 for the relevant tax period.
Pay As You Go (`PAYG') tax collections mechanism.
The entity
must lodge the activity statement within 21 days after the end of the tax period (Section 31-10).Section 31-25 provides:
If the annual turnover of the entity is $20 million or more, the entity must electronically lodge the activity statement (and also pay GST electronically under section 33-10);
If the annual turnover of the entity is less than $20 million than the entity may choose to lodge the activity statement electronically.
If the entity is a member of a GST group, only the representative member is required to lodge a return under Section 48-60.
For joint ventures, only the joint venture operator has to lodge a return under Section 51-50 for the joint venture activities. However, if the entity has GST branches then the entity will need to lodge a separate return for each GST branch.
If the entity is a resident agent making taxable supplies for a non-resident who is registered, or required to be registered, the entity will have to lodge a return on behalf of the non-resident entity for which it is acting (Section 57-45), unless the non-resident has a net amount of zero for the tax period (Section 57-40).
What if the entity fails to lodge or lodges late?
Penalties will apply if
the entity fails to lodge or
lodges late.
Where the entity
fails to lodge an activity statement as required, a penalty of $10 per week, or proportion of a week, will be imposed while the statement is outstanding. The maximum penalty under the Tax Administration Act 1953 is $200.Can the entity apply for an extension to pay its tax liability?
Yes.
Section 33-20 provides the Commissioner with a discretion to extend the time for payment of a net amount, an amount of GST or a penalty payable, or allow it to be paid by instalments.
Payments and refunds
As noted earlier, the entity will need to record the entity's net amount of GST payable or refundable on the entity's activity statement. This amount can be offset against any other tax liability that the entity may be required to account for on the entity's activity statement under
the PAYG,
FBT,
WET,
LCT systems.
(Division 33)
GST owing to the ATO must be paid within 21 days after the end of the tax period.
The entity may pay the net amount by means of electronic transmission.
However, if the entity's turnover is $20 million or more, the entity must make payment electronically.
Note that payments in relation to taxable importations will be made at the time of the importation.
The Commissioner may allow an extension of time for the payment of the net amount or allow the net amount to be paid by instalments.
Alternatively, if the Commissioner has reason to believe the entity or an individual is leaving Australia prior to a particular payment, he can require the entity to pay the amount at an earlier time.
(Division 35)In relation to refunds of GST amounts:
if a refund is due, the
Commissioner must pay the entity the refund within 14 days after lodgment of the activity statement; the amount is paid directly into a bank account nominated by the entity; and
the Commissioner may apply the amount against any other tax liability and refund the remainder of the net amount.
Where a refund is not paid within 14 days as required, the Commissioner will be required to pay interest on the outstanding amount.
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