What Businesses and Individuals Need to Know About Instalment Activity Statements (IAS)

Key Differences Between IAS and BAS

While both the Business Activity Statement and Instalment Activity Statement are activity statements used to report tax obligations, they serve different purposes. The BAS is for businesses registered for goods and services tax and covers GST, PAYG withholding, FBT instalments, and other tax obligations. The IAS, on the other hand, is mainly for reporting PAYG instalments and PAYG withholding when you don’t need to report GST.

For example, if you have a registered tax business with employees but are not registered for GST, you’ll use the IAS forms to report PAYG withholding tax. If you’re registered for GST, you’ll use both BAS and IAS as needed. It’s important to plan ahead and know which form required for your situation to avoid confusion and ensure compliance.

When to Use IAS vs. BAS

• Use the IAS if you’re not registered for GST but need to report PAYG withholding or PAYG instalments.

• Use the BAS if you’re registered for GST and need to report goods and services tax, PAYG withholding, and other taxes.

• Some businesses will need to lodge both BAS and IAS, depending on their tax obligations and reporting period.

Preparing and Lodging Your IAS

Step 1: Gather Required Information

Before you lodge IAS’s, make sure you have all your IAS documents, including any pre printed document issued by the ATO. You’ll need records of your business and investment income, PAYG withholding, and any other tax obligations for the reporting period. This helps ensure your instalment amount is accurate and your income tax is paid on time.

Step 2: Complete the IAS Form

Fill out the IAS forms with details about your PAYG withholding, PAYG instalments, and any other relevant information. If you have ABN withholding or FBT instalments, include those as well. Using accounting software or the ATO’s online services can make this process easier and help you stay organised throughout the financial year.

Step 3: Lodge and Pay

Lodge your IAS through the ATO’s online services, by mail, or through your tax agent. Make sure you meet the due date for your reporting period to avoid late fees. Payments can be made online, and setting up reminders is a good way to plan ahead and stay on top of your IAS obligations.

Varying Your PAYG Instalments

If your business or investment income changes, you can vary your PAYG instalments by updating your instalment amount on the IAS forms. This flexibility helps you manage your cash flow and avoid overpaying income tax. Be sure to keep accurate records and use the ATO’s online services to make adjustments as needed.

To avoid overpaying or making mistakes with your PAYG instalments, read our articles on the Benefits of Overpaying PAYG Instalments and the PAYG Instalments Guide for practical tips and clear explanations.

Common Challenges and Solutions

Challenge 1: Incorrect Instalment Amounts

Sometimes the pre-printed document issued by the ATO doesn’t reflect your current income. In this case, you can update your instalment amount on the IAS forms to better match your actual business and investment income.

Challenge 2: Missing Deadlines

Missing the due date for your IAS can result in late fees and interest charges. Setting reminders and using online services can help you lodge IAS’s on time.

Challenge 3: Confusing IAS with BAS

It’s important to know whether you need to lodge an IAS, a BAS, or both. If you’re unsure, check your IAS documents or speak with a registered tax professional for guidance.

To avoid common mistakes and penalties when lodging your BAS, read our article on How to Lodge your BAS correctly and fix errors before they become costly.