It is inevitable, given the cycle of business, that there will be good times and bad times – and it’s often during the bad times that cash is hard to find.
We’re already at the end of the first quarter of the 2014/15 financial year, and many businesses and their owners are preparing to lodge their September quarter Business Activity Statement (BAS) and/or Instalment Activity Statement (IAS).
BAS and IAS documents are the method by which a Pay As You Go Instalment (PAYGI) is made. PAYGI is an obligation of taxpayers earning a certain amount of income from business or investments, to essentially “pre-pay” their estimated tax liability for the current financial year, with payments being made at regular intervals (ie: quarterly) to relieve the cash flow burden.
The thing to remember is that the amount you are required to pay is based on your latest assessed income tax return, so right now you could be paying PAYGI for the 2015 year based on your 2013 income – what are the chances that they are the same…or even similar?
So if your business circumstances have changed, and the amount you are required to pay on your BAS or IAS for PAYGI does not reflect the current estimated profit of your business…you can lodge a variation!