The ATO has acknowledged that it failed to apply the reduction in the company tax rate for base rate entities with an aggregated turnover of less than $50 million, resulting in PAYG instalments being calculated using the previous rate.
The 27.5 per cent tax rate was reduced to 26 per cent on 1 July, and is set to fall to 25 per cent next year.
“We have now corrected this error and will issue your clients with a new PAYG instalment letter reflecting their updated instalment rate or amount,” the ATO said in an online update.
“We apologise to you and your clients for any inconvenience caused.”
The ATO noted that clients who have lodged their activity statements and paid an amount based on the incorrect instalment calculation will receive a refund for the overpaid amount from this week.
No action will be required from tax agents or their clients.
Clients who have yet to lodge can choose to lodge based on the current instalment calculation on the activity statement and receive a refund for the excess amount paid due to the error.
Entities can also continue to vary their instalment rate or amount with no impact to them.
“All future activity statements will have the correct rate applied,” the ATO said.
“If you or your clients have varied their instalment rate or amount, the variation will continue until the start of their next income year.
“You can continue to vary your clients’ activity statements if their rate or amount does not reflect their current trading situation.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.