Please Note: In March 2018 QuickBooks will start rolling out a new GST experience. This will happen gradually over a period of time. If you can see the View reports menu when you are on the GST centre main page, you are in the classic experience, and if you can see Run Reports menu, you are on the new experience.

What are PAYG Instalments?

Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability.

PAYG instalments are typically reported and paid to the ATO on a quarterly (BAS) or monthly (IAS) basis, the frequency of which is determined by the ATO based on your annual business income.

The ATO will let you know if you need to start paying by instalments under the PAYG installment system, and before your PAYG instalments are due, they will send an activity statement or installment notice, depending on your circumstances.

PAYG Instalments are not calculated by QuickBooks, only reported on the business or installment activity statement.

For more information about PAYG instalments, please consult a tax advisor and/or explore the ATO website links below:

https://www.ato.gov.au/General/PAYG-instalments/
https://www.ato.gov.au/General/PAYG-instalments/Calculating-the-amount-you-pay/
https://www.ato.gov.au/general/payg-instalments/how-to-vary-the-amount-you-pay/

Reporting PAYG Instalments in the Classic Experience

When you select your PAYG installment method in Edit GST Settings, your BAS form will include the PAYG income tax Installment section on your BAS, and PAYG tax income tax installment lines under Amounts you owe the tax office and Amounts the tax office owes you.

Values input under the PAYG income tax installment sections will show figures on your BAS form, but will have no accounting impact post lodgement. You will need to record an adjustment to increase or decrease the balance transferred to BAS suspense upon lodgement.

Any adjustments created will be listed in the related section of the GST Detail report for that period. Adjustment transactions cannot be changed, only deleted.

Option 1 (by installment)

Under PAYG income tax installment (Option 1), first input your PAYG installment (copy from BAS) amount provided to you by the ATO, but remember that this input does not impact the books or BAS calculation.

To report your PAYG installment on your BAS using the installment method, record an adjustment on line 5A by clicking the blue Record link on the far right down under Amounts you owe the tax office. Input the amount owed in Adjustment amount, select your Adjustment account, check the Adjustment date and add any memo details as required. Once you Save the adjustment, the amount you owe will then display on your BAS.

If you need to report a variance to what the ATO is expecting, under PAYG income tax installment (Option 1), input your Estimated tax for the year, your Varied amount for the quarter​ and your Reason code for variation (refer list of codes), but again remember that these inputs do not impact the books or BAS calculation. To actually claim the variance you must record an adjustment on Line 7C under Amounts the tax office owes you.

When you mark your BAS as lodged, QuickBooks will post any installment amounts owed against the BAS Suspense account.

Option 2 (by income tax rate)

Under PAYG income tax installment (Option 2), input your PAYG installment income, the ATO installment rate (provided to you by the ATO), and manually calculate your line T11 amount to determine the total installment owed to the ATO.

To report your PAYG installment on your BAS you will then record an adjustment on line 5A by clicking the blue Record link on the far right down under Amounts you owe the tax office. Input the amount in Adjustment amount, select the Adjustment account, check the Adjustment date and add any memo details as required. Once you Save the adjustment, the amount you owe will then display on your BAS.

If you need to report a variance to what the ATO is expecting, under PAYG income tax installment (Option 2), fill out New varied rate (enter percentage) and Reason code for variation (refer list of codes), but remember that these inputs do not impact the books or BAS calculation. To actually claim this variance you must record an adjustment on Line 5B under Amounts the tax office owes you.

When you mark your BAS as lodged, QuickBooks will post any installment amounts owed against the BAS Suspense account.

Reporting PAYG Instalments in the New Experience

In the updated GST experience, when Company Income Tax (PAYG instalments) is enabled in GST Settings, QuickBooks will automatically create a PAYG Installment Liabilities account, and include PAYGI within your lodgement flow.

If you have Enabled BAS E-lodgement for QuickBooks, your PAYG installment amount will be downloaded automatically and pre-populated in your lodgement.

Check GST Settings to set your reporting frequency (monthly, quarterly, or annually) and set your reporting method (amount or rate) prior to lodgement.

Installment Amount Method

To report your income tax installment using the amount methodinput the amount owed under Income tax installment amount during the PAYGI filing stage of your activity statement.

Tick the I need to adjust the installment amount if you need to adjust the figure the ATO is expecting and provide details as to why, or to include credit amounts on your activity statement.

When your activity statement is lodged, QuickBooks will automatically post a journal entry against the PAYG Installment Liabilities account and the ATO Clearing account.

Installment Rate Method

To report your income tax installment using the rate methodinput your Income tax installment rate and Income for the period figures during the PAYGI filing stage of your activity statement.

Tick the I need to adjust the installment rate if you are using a rate other than what the ATO is expecting and provide details as to why, or to include credit amounts expected from the ATO on your activity statement.

When your activity statement is lodged, QuickBooks will automatically post a journal entry against the PAYG Installment Liabilities account and the ATO Clearing account.