PAYGI & GST Indexation Frozen
June 15, 2020
PAYGI & GST Instalments will not be indexed in 20/21
To assist cashflow for business and individuals, the government has moved to legislate the suspension of indexation of tax instalments, which will affect an estimated 2.2 million taxpayers paying PAYG income tax instalments, and around 81,000 taxpayers paying GST instalments in 2020–21.
Historical gross domestic product (GDP) outcomes are normally used to index a range of instalment amounts annually to reflect anticipated income growth. However, the GDP adjustment factor for the 2020–21 income year will be reduced to nil.
The GDP adjustment factor is applied by the commissioner to work out the amount of PAYG instalments payable by a taxpayer in certain circumstances.
The reduced GDP adjustment factor will also be used to work out the GST instalments payable by small-business entities in the 2021 income year.
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