GDP adjustment for 2012/13 PAYG instalment amounts
The ATO has advised that, from 1 July 2012, the gross domestic product (GDP) adjustment used to work out quarterly PAYG instalment amounts will be 6%.
Editor: This is the adjustment made to PAYG instalment amounts to reflect expected changes in the economy, to ensure that PAYG instalment amounts reflect a taxpayer’s expected tax liability for the current income year as accurately as possible.
As the GDP adjustment is worked out using information from earlier years, the ATO notes that this means it may not match current economic conditions.
That is, when economic growth slows, the GDP adjustment may seem relatively high, while in conditions of sudden economic growth, the GDP adjustment may seem relatively low.
Editor: If your PAYG instalment amount as worked out by the ATO seems too high (or too low), please contact our office, as we may be able to vary the instalment amount (although it should be noted that the ‘general interest charge’ may be payable if the PAYG instalment amount is varied down but at the end of the year the taxpayer ends up having paid less than 85% of the tax that they should have paid on their business and investment income).