The current pay as you go (PAYG) instalment calculations represent a substantial compliance burden. Simplify the various methods to calculate PAYG instalments by, for instance, basing them off accounting profit figures.
The Board has considered this idea as part of its self-initiated review exploring the potential to align accounting and tax systems in Australia. One element of this review was to look at the appropriateness of allowing small businesses to calculate Pay As You Go Instalments based on accounting income. One such area brought to the attention of the Board Working Group examining this subject was the potential introduction of an additional option to allow businesses to calculate pay-as-you-go instalments (‘PAYGI’) based on accounting income (as is available in New Zealand – called the Accounting Income Method (‘AIM’)).
The New Zealand experience may take some time to reach maturity. As such, the Board suggests that this topic be reviewed in six to twelve months’ time to assess how it is tracking in New Zealand before forming a view to present to government.
In the meantime, the Board is interested in hearing from the Sounding Board community as to how PAYG instalment calculations may be further simplified.