Amendments contained in the Tax Laws Amendment (2013 Measures No 2) Act 2013 require that, from 1 January 2014, corporate tax entities (including companies, corporate limited partnerships, corporate unit trusts or public trading trusts defined in s 960-115 of the ITAA 1997) who have base assessment installment income over a $1bn threshold will need to start paying monthly installments, instead of quarterly.
The ATO says corporate tax entities who meet or exceed this threshold will soon receive a letter advising that they meet the criteria and may be eligible to pay monthly installments. On 1 October 2013, the ATO will conduct a monthly payer requirement test to determine those entities that will enter the monthly system from 1 January 2014. These entities will receive a further letter confirming entry.
To ensure the threshold applies equitably to all entities, the ATO says those entities that apply the TOFA rules are required to use an adjusted base assessment installment income. This figure is calculated by including the gross amount of ordinary income from financial arrangements, not the net gain or loss amount calculated under the TOFA rules.
If the adjusted base assessment installment income exceeds the threshold, the entity will need to pay its PAYG installments monthly. The ATO says where it can calculate this amount, it will advise entities of their eligibility in October 2013. However, most TOFA entities will need to calculate their adjusted base assessment installment income in order to determine their eligibility into the monthly cycle. Those entities will need to notify the ATO for their inclusion by 30 November 2013.
[LTN 135, 16/7/13]