logo
Receive the latest mybusiness news
SUBSCRIBE TO OUR NEWSLETTER
Copyright © 2020 MOMENTUMMEDIA

PAYG, GST indexation suspended for FY2020–21

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
10 June 2020 1 minute readShare
tax

Some 2.2 million taxpayers will benefit from the government’s suspension of PAYG indexation amounts for the 2020–21 financial year announced on Wednesday.

Assistant Treasurer Michael Sukkar has announced the government will legislate to suspend the indexation of tax instalment amounts for the 2020–21 financial year in response to COVID-19.

This change will affect instalments payable to the Australian Taxation Office (ATO) for an estimated 2.2 million taxpayers paying pay-as-you-go (PAYG) income tax instalments, and around 81,000 taxpayers paying goods and services tax (GST) instalments in 2020–21. 

Advertisement
Advertisement

Historical gross domestic product outcomes are normally used to index a range of instalment amounts annually to reflect anticipated income growth.

“Given the economic impact of COVID-19, the government has decided to suspend this indexation for 2020–21,” Mr Sukkar said.

 

In addition to suspending indexation, taxpayers will still be allowed to vary their instalment amounts if they believe they will pay too much tax for the year.

“Taxpayers who pay instalments based on their current income are not subject to indexation because their instalments already adjust to changes in income,” the Assistant Treasurer said.

“While these taxpayers are not affected by the suspension of indexation, they have the same right to vary their instalments.”

‘Rational approach’

Commenting on the announcement, the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said the government is taking a “rational approach”. 

SPONSORED CONTENT

 

“Every little bit counts,” Ms Carnell told MyBusiness. 

“The reality of the economy at the moment, and profitability of businesses being pretty flat, probably means that people’s tax liability at the end of the year is likely to be less than expected anyway. So, by not indexing the payment, [this] is a very sensible approach. Similarly, with people with GST instalments, it helps them right now.” 

For businesses, Ms Carnell said, this will be a much-needed benefit to cash flow. 

“If these payments aren’t indexed, they will be slightly lower; that means more money in the pockets of small businesses, and from a cash-flow perspective, they desperately need that.”

PAYG, GST indexation suspended for FY2020–21
mybusiness logo
Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

Leave a Comment

Latest poll

How satisfied are you with the SME measures in the federal budget?