Terms of endearment # 5

PAYG Withholding: Pay As You Go Withholding is what was once called Group Tax and is the amount that must be withheld from employee's wages or salaries and sent to the ATO via the BAS.

At the end of the financial year what were once called Group Certificates have now been replaced by PAYG Payment Summaries. Each employee's gross income, and the amount withheld in tax, is recorded along with other information such as allowances, Reportable FBT amounts and Lump Sum Payments.

PAYG Instalments: Pay As You Go Instalments are amounts of tax payable for individuals who are not on wages or salaries and for companies or superannuation funds. It allows payment of tax ahead of time to be credited on a person or entity's tax return.

Terms of endearment # 3

The ATO can send two different forms to certain taxpayers each quarter, both of which can cause confusion to those who receive them.

Business Activity Statement (BAS): The BAS is a composite form collecting figures on a variety of different taxes and rebates. This form is sent to companies, trusts, partnerships and individuals who operate a business in Australia.

The return obtains details regarding:

• Goods and Service Tax (GST)
• Pay As You Go Withholding Tax (PAYGW) - this is employee group tax
• Pay As You Go Tax (PAYG) - this is personal or company tax instalments
• Fringe Benefits Tax (FBT)
• Wine Equalisation Tax
• Luxury Car Tax
• Fuel Tax Credits

As you can see it covers a wide assortment of taxes primarily related to business activities of which an entity may have three or four at any one time.

Income Activity Statement (IAS): The IAS is sent to anyone receiving taxable income that does not have tax withdrawn through the year (either through PAYGW amounts from wages or PAYG instalments on BAS statements).

IAS statements are primarily sent to individual partners of a partnership, trust beneficiaries, sole traders who aren't registered for GST or employ anyone, self managed superannuation funds and individuals who receive income such as dividends, interest or positively-geared rental receipts.

Therefore partners of a partnership may receive a BAS in regard to the partnership if they are registered for GST or employ someone, and also each receive an IAS to obtain PAYG instalments for themselves personally.