Government Suspends PAYG and GST Indexation
In the wake of the COVID-19 pandemic, the Federal Government has just announced it will suspend indexation of Goods and Services Tax (GST) and Pay-As-You-Go (PAYG) Income Tax instalments for this financial year 2020 – 21.
The announcement was made by Assistant Treasurer Michael Sukkar last Wednesday and is forecasted to benefit 2.2 million Australian taxpayers currently paying PAYG income tax instalments and 81,000 taxpayers paying GST instalments during the next financial year.
Generally, the Australian Tax Office indexes PAYG Income Tax and GST against the Gross Domestic Product (GDP) outcomes in order to determine income growth.
The suspension of instalment indexation is projected to assist a number of sole traders, small businesses, and those who receive business and investment income.
The announcement comes just after the ATO declared that taxpayers would be allowed to vary their PAYG instalments without penalties in response to the pandemic.
Assistant Treasurer Michael Sukkar stated this in his announcement:
“In addition to suspending indexation, taxpayers can still 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.”
In conjunction with the PAYG and GST Indexation suspension announcement, the Federal Government has also recently announced the 150k instant asset write-off has been extended.
The team at Simmons Livingstone and Associates are here to answer any of your questions and concerns regarding recent announcements made by the Federal Government.