GST instalment reporting¶

Most small businesses work out their GST and report it each quarter. GST instalments are a different option. Instead of working out your GST every quarter, you pay an amount the Australian Taxation Office (ATO) has worked out for you, and then you report your actual GST just once a year.

It is a way to spread the payments across the year while cutting down how often you have to do the sums.

In one line

With GST instalments, you pay a quarterly amount the ATO works out for you, then report your actual GST once a year on an annual GST return.

Why this matters¶

Working out GST every quarter takes time. If your business is small and steady, the GST instalments option lets you keep paying across the year without doing the full calculation each quarter. You still settle up on your real figures once a year, so you are never paying the wrong amount for long. Knowing this option exists means you can choose the approach that suits your business.

What you will learn¶

What the GST instalments option is
Who can use it, and how you can vary the instalment
How it differs from working out GST each quarter under Simpler BAS

Understanding the concept¶

Under the usual quarterly method, you add up your GST for the quarter and report it on your BAS. With GST instalments, the ATO does the working-out for you up front.

Here is how it works:

Each quarter, you pay an instalment amount the ATO has worked out. The ATO bases this figure on your most recent annual information. You do not have to calculate your GST for the quarter.
Once a year, you lodge an annual GST return. This is where you report your actual GST for the whole year. The return sorts out the difference between what you actually owed and the total of the instalments you paid.
If the instalments added up to less than your real GST, you pay the difference. If they added up to more, you get the difference back.

You can also vary the instalment. If the amount the ATO worked out no longer fits your business — say your sales have dropped — you can change the instalment to an amount that better matches what you expect to owe.

Who can use it? The ATO explains that you may choose GST instalments if you meet the eligibility rules. In general terms, this includes a business with an aggregated turnover of less than $10 million (or, if you do not carry on a business, a GST turnover of $2 million or less). You also need to be up to date with your lodgments and not be in a position where the ATO usually owes you a refund. The ATO confirms your eligibility, so it is worth checking with them before you switch.

For accountants & bookkeepers

The ATO sets out further conditions for electing GST instalments: a current, continuous BAS lodgment record of at least four months immediately before the current tax period, compliance with obligations to lodge previous GST returns, and not being in a net refund position. On the annual GST return, the total of the instalments that were payable for the year is reported at label 1H, and the return reconciles that total against the actual annual GST liability. Where a client pays GST instalments, the annual GST return is generally due on the same date as their income tax return; if no income tax return is required, the ATO gives a due date of 28 February following the financial year the return covers.

Example¶

Priya runs a seasonal garden-supply business. Most of her sales happen in spring and summer, and things are quiet the rest of the year. Her turnover is well under the threshold, so she is eligible for GST instalments.

Priya chooses the GST instalments option. Each quarter the ATO sends her an instalment amount to pay, worked out from her last annual figures. She does not have to calculate her GST four times a year. She just pays the amount shown.

In a slow winter quarter, Priya expects to owe much less GST than the instalment suggests. She varies the instalment down to a figure that matches what she really expects to owe, so she is not paying more than she needs to across the quiet months.

At the end of the year, Priya lodges her annual GST return. It compares the total of the instalments she paid against her actual GST for the year and works out whether she owes a little more or gets a little back. She has spread her GST across the year with far less paperwork each quarter.

Common mistakes¶

Thinking the instalment is your final GST — it is a prepayment. Your actual GST is settled on the annual GST return.
Forgetting to lodge the annual GST return. The instalments alone do not finish the job; the annual return is where you report your real figures.
Never varying the instalment when your business changes. If the ATO's amount no longer fits, you can vary it rather than overpay or underpay all year.
Assuming everyone can use it. There are eligibility rules, and the ATO confirms whether you qualify.

How this works in myaccountant¶

In the app — myaccountant reports your GST under the reporting method you have chosen with the ATO. If you use GST instalments, the app follows that method, and it reflects a change of method when your reporting arrangement with the ATO changes.

Key points¶

GST instalments let you pay a quarterly amount the ATO works out, instead of calculating GST each quarter.
Once a year you lodge an annual GST return that reports your actual GST and settles the difference.
You can vary the instalment if the ATO's amount no longer suits your business.
Eligibility generally covers smaller businesses under the turnover threshold, and the ATO confirms whether you qualify.
Under Simpler BAS quarterly reporting you work out GST every quarter; under GST instalments you do the full sums only once a year.

Learn next¶

General information only — not tax, super or financial advice.

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