Australian companies and superannuation funds pay instalments of income tax on a quarterly basis under the PAYG system. PAYG payments are made as part of the Business Activity Statement (BAS).
Under the tax consolidation regime, the head entity of a consolidated group pays instalments on behalf of the group based on the instalment rate and instalment income for the consolidated group. Groups require adequate systems and processes in place to determine consolidated instalment income on a quarterly basis.
Superannuation Funds that invest member funds in a Pooled Superannuation Trust (PST) or insurance policies in a Life Insurance Company are able to transfer their taxable contribution income, and associated tax liability, to the PST or life company by making a s275 election. The ATO will include all taxable contributions, prior to s275 transfers, in determining the fund’s instalment rate. Accordingly a superannuation fund should include all taxable contributions in its determination of instalment income.
The assessable income of a Superannuation Fund includes personal superannuation contributions for which a tax deduction is claimed by the member. As a fund is not able to determine the taxable amount of a personal contribution until a s82AAT notice is received from the member, for the purpose of determining its PAYG instalment income the ATO allows the fund to make a reasonable estimate of its taxable contributions for the current year based on the proportion of taxable contributions received in the previous year.