Bradbury unveils consultation on changes to when companies pay tax in Australia
Taxpayers in Australia have the chance to influence the implementation and design of the reform of when large companies pay income tax.
David Bradbury, the Assistant Treasurer, has released a consultation paper dealing with the change from quarterly to monthly payments of company tax for large businesses over the next three years, depending on the size of company. Bradbury had announced the change in October.
From January 1 2014 companies with turnover of A$1 billion ($1.02 billion) or more – around 350 - will make PAYG (Pay As You Go) payments monthly;
Companies with turnover of A$100 million or more – the government says there are about 2,500 - will start to make monthly payments from January 1 2015; and
10,500 companies - those with turnover of A$20 million or more - will have until January 1 2016 to prepare to do so.
Companies with an annual turnover between A$20 million and A$100 million that are not consolidated for income tax purposes, will not be required to move to monthly PAYG instalments if they pay their goods and services tax (GST) quarterly or annually.
Bradbury (pictured right) said the change would align company tax payments better with GST payments. Companies with a GST turnover of $20 million or more are required to pay their GST monthly. The minister added that it was “reasonable and logical” to ask large companies to pay tax as they go because that is what workers have to do.
“This reform will make the tax system more responsive, efficient, and consistent by better matching tax collections with the economic conditions faced by business,” Bradbury said when he launched the consultation paper on February 28.
“The Government welcomes views on refinements to the calculation of instalment income and instalment rates to better reflect an entity's final tax liability,” Bradbury added.
March 13 is the closing date for feedback and comments on the issues in the consultation paper, which cover:
Introducing monthly PAYG instalments;
Entering and exiting monthly PAYG instalments; and
Improving the calculation of instalment income
After exposure draft legislation comes out, the government hopes to pass the new law in the Winter 2013 session of parliament, which starts on May 14 and ends on June 27.