Consultation Paper on Monthly Company Tax Instalments for Large Companies
Assistant Treasurer David Bradbury today released a consultation paper on the three‑year process to reform the timing of company tax payments by large companies.
The consultation paper sets out the proposed implementation and design details for how to better align the timing of PAYG instalments for large companies with their actual economic activity.
This reform will make the tax system more responsive, efficient, and consistent by better matching tax collections with the economic conditions faced by business. It will also generally align the timing of company tax instalments for affected companies with their GST payments.
The total tax paid by companies will not change, but from 1 January 2014 companies with turnover of $1 billion or more will be required to remit their PAYG company tax instalments monthly, not quarterly. Companies with turnover of $100 million or more will have a further one year period to prepare for this change, with monthly payments to start on 1 January 2015. Companies with turnover of $20 million or more will have over three years to prepare for the change, with monthly payments to start on 1 January 2016.
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 companies to use losses more flexibly.
The Government welcomes views on refinements to the calculation of instalment income and instalment rates to better reflect an entity's final tax liability.
Consultation will close on 13 March 2013. I encourage all interested parties to participate in the consultation process.A copy of the consultation paper may be found at: www.treasury.gov.au.
28 February 2013