Can I pre-pay my tax? Yes you can!
Once upon a time, believe it or not, you couldn’t pre-pay your tax – no, really! If you tried to do this, the ATO would just refund it straight back to you because they didn’t know what to do with it! Well, as of January 2016, this has all changed!
You can now make payments to the ATO in advance i.e. before your tax is due. This is a great idea! It’s a way of putting away savings for your tax debts before you’re tempted to spend them! Some of our clients already do this in a round-about-way by utilising a separate bank account to house savings for tax and super payments. We advise that they should still do this but they can now also transfer those funds to the ATO on a regular basis before their BAS and/or tax return is lodged. You can make pre-payments any time, using any payment method you have used previously.
How do I pre-pay my tax?
Easy! Simply pay funds via the method you currently use to pay your BAS or income tax. You need to ensure that you are paying into the correct “tax account” i.e. the one you wish to house the funds. Each tax account whether it be for BAS, income tax or a HELP debt etc., will have it’s own EFT and/or Bpay reference numbers so check these before depositing your hard-earned dollars. If you make a mistake and pay into the wrong account, the deposit can be reversed but it is a pain to organise this so make sure you get it right from the start.
But hang on, what if I need the money back?
Don’t stress! If you suddenly find yourself in a situation where cash flow is tight, you can ask your BAS or Tax Agent to request a refund on your behalf and the funds will be returned to you. No problems!
Why did the ATO decide to offer this service?
Well, it appears they are listening to tax payers and tax professionals (believe it or not!). They received feedback that this would be a valuable service for business owners and other tax payers, and so they have made it possible. Nice one ATO!
If you are interested in pre-paying your BAS debt and would like more information about this, please get in touch with us – we’d be happy to help.