What is an Instalment Activity Statement (IAS)? | Definition and overview

It's essentially a simplified version of the Business Activity Statement (BAS), but specifically for those who are not registered for Goods and Services Tax (GST). Think of it as a way to keep track of and pay your taxes in instalments throughout the year, rather than a lump sum at the end.

Who needs to lodge an IAS?

You will likely need to lodge an IAS if you fall into one of these categories:

• Individuals and businesses not registered for GST: This includes sole traders, partnerships, trusts, and companies that don't meet the GST registration threshold but have other tax obligations.
• Businesses with PAYG withholding obligations: If you have employees, you need to withhold tax from their wages and pay it to the ATO. If you're a "medium withholder" (withholding over $25,000 per year), you'll need to lodge an IAS monthly to report these withholdings, even if you also lodge a BAS quarterly.
• Individuals with specific tax obligations: This might include individuals who receive income from investments, rental properties, or other sources where tax isn't automatically withheld.

What taxes are reported and paid on an IAS?

An IAS covers the following tax obligations:

• PAYG instalments: These are regular prepayments of your income tax, calculated based on your expected income for the year. It's like paying your income tax in advance, spreading the cost throughout the year.
• PAYG withholding: This refers to the tax you withhold from payments made to employees, contractors, or other businesses. You are essentially collecting tax on behalf of the ATO.
• FBT instalments: If your business provides fringe benefits to employees (like cars or health insurance), you may need to pay Fringe Benefits Tax (FBT). The IAS allows you to pay this in instalments.

How often do you need to lodge an IAS?

The frequency of lodging depends on your specific circumstances:

• Monthly: If you are a medium withholder (withholding over $25,000 in PAYG per year).
• Quarterly: For most other taxpayers lodging an IAS.

Key features and considerations

• Different IAS forms: The ATO provides different versions of the IAS form depending on your specific obligations (e.g., IAS – Instalment activity statement for PAYG income tax instalment obligations only, IAS I – for taxpayers who have elected to pay an annual PAYG income tax instalment).
• Due dates: It's crucial to lodge your IAS and pay the amounts due by the due date to avoid penalties. The due dates vary depending on your reporting frequency and can be found on the ATO website.
• Payment options: The ATO offers various payment methods, including online, by phone, by mail, or in person at an Australia Post outlet.
• Record-keeping: Maintaining accurate records of your income and expenses is essential for completing your IAS accurately.

Why is lodging an IAS important?

• Meeting your tax obligations: Lodging an IAS ensures you are complying with Australian tax laws and fulfilling your tax responsibilities.
• Avoiding penalties: Late lodgement or payment can result in penalties and interest charges.
• Managing cash flow: Paying tax in instalments can help you manage your cash flow throughout the year, rather than facing a large tax bill at the end of the financial year.

Need more help?

The ATO website provides detailed information, instructions, and forms related to the IAS. You can also seek assistance from a registered tax agent or accountant if you have any questions or need help with completing your IAS.

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