The move aims to align the payment of corporate tax by large
companies with their GST payments.
The government said, in
an announcement on October 22, the total tax paid by
companies will stay the same but, from January 1 2014,
companies with revenue of more than A$1 billion ($1.04 billion)
(about 350 companies) will have to make their Pay As You
Go (PAYG) corporate tax payments every month instead of
Companies with turnover of $100 million or more (about 2500
in total) will do the same from January 1 2015 and around
10,500 companies, those with turnover of $20 million or more,
will have another year after that to prepare before they start
paying monthly from January 1 2016.
"This reform will make the tax system more responsive,
efficient, and consistent by better matching tax collections
with the economic conditions faced by business," said
Wayne Swan, Australia's Deputy Prime Minister and
Treasurer, and David
Bradbury, the Minister Assisting for Deregulation.
"Affected companies will pay smaller tax instalments
immediately following months when business is down, and larger
instalments when business is strong. It will also align company
tax instalments with GST payments to streamline companies'
The streamlining will occur because most companies
have to pay their income tax in four quarterly PAYG company tax
instalments, but most large companies are generally required to
pay GST in monthly payments.
"This change continues the reform of the company tax
instalment system that began in the late 1980s and complements
other initiatives the government has announced to address
timing disparities in the tax system, such as loss carry-back,
which allows businesses to use losses more flexibly, as well as
more timely access to the Research and Development Refundable
Tax Offset," the announcement added.
The government said it would be happy to discuss other
reforms to the calculation of PAYG instalments to avoid
overpayment or underpayment. It said it wanted to make sure
that sums paid during the year are as close as possible to the
final tax liability.
A consultation paper will be released in early 2013.