The ATO has identified some common errors when reporting quarterly pay as you go (PAYG) instalment income in activity statements.  The following tips will help to avoid those errors.

Report gross income

Your must report your gross instalment income (not your net or taxable income). The income reported should not be reduced by any allowable deductions incurred in deriving that income.

Monthly GST payers must report quarterly income

Quarterly instalment payers who pay GST monthly are required to work out their gross instalment income for the full quarter and report this at label T1 on their activity statement.

Include all instalment income
for the quarter

You must include all relevant income when calculating gross instalment income. This includes:

• goods or services you sell or supply
• interest received or credited to your bank account
• gross rent
• dividends paid or reinvested on your behalf (do not include imputation credits)
• royalties
• gross amount of income where tax has been withheld because a tax file number or Australian business number was not reported
• foreign pensions that are assessable in Australia
• your proportion of any partnership or trust income
• withdrawals from farm management deposits (if you make a farm management deposit, instalment income for that period is reduced)
• fuel tax credits
• Taxation of financial arrangements (TOFA) made up of total TOFA gains less TOFA losses (but only include if this is a positive amount).

If you need clarification on any of the above, or if you would like a qualified accountant to prepare or review your activity statement, please contact us.