Once your SMSF income from investment and concessional contributions reach a certain level, the income tax for your SMSF is required to be paid by instalments.
When the PAYG Instalment notice will be issued by ATO?
If the tax position for your SMSF is payable, ATO will issue a PAYG instalment notice to your SMSF after the tax return lodged. ATO will advise you that your SMSF has met the PAYG instalments income criteria and will need to make payments quarterly.
How does ATO calculate the PAYG Instalment amount?
The PAYG instalment amount is calculated using information in your most recent SMSF income tax return, which is adjusted by the gross domestic product uplift factor.
Will PAYG instalment reduce income tax payable for my SMSF?
Yes. ATO will credit these payments to your SMSF annual income tax account so that, when you lodge your next SMSF income tax return, you don’t have to pay your tax in one lump sum. If your SMSF paid more than necessary, ATO will send you a refund. If you paid less, ATO will send you a bill for the shortfall.
How to respond and lodge ATO’s PAYG instalment notice?
When lodging your instalment activity statement, you will have two options:
-Pay the instalment that ATO has calculated and send to you, or
-Calculate your own instalment using the instalment rate on the table prescribed in the letter. Simply apply it as a percentage of your quarterly SMSF gross income.
You can vary these instalments if your income changes, using your activity statement.
Can my SMSF pay PAYG instalment annually?
If you prefer to pay one annual instalment, please phone 13 72 26 before 28 April and choose the ‘Lodge pay as you go instalment annual election’ option. Annual instalments are usually due by 21 October.