When a lodgment deferral for an activity statement is granted by the ATO, the payment is not automatically deferred. How does the BAS Agent know what to pay until they complete the BAS?
A deferral of lodgment extends the due date for lodgment without penalty. The Commissioner can defer the time for lodgment of any approved form pursuant to Section 388-55 of Schedule 1 to the Taxation Administration Act 1953 (TAA1953). The ATO exercises the discretion to grant lodgment deferrals by applying PS LA 2011/15 - Lodgment Obligations, Due Dates and Deferrals.
It would be reasonable for the ATO to defer lodgment of an obligation in circumstances such as the serious illness of the agent or client, impeded access to records, or where a small number of returns will not be lodged by the due date despite a concerted effort by the agent.
Separate legislative provisions provide the Commissioner with the discretion to defer the due date for payment of a tax liability. Payment deferrals are primarily based on the client’s ability to pay by the due date.
The relevant provision under which the Commissioner may defer time for payment is section 255-10 of Schedule 1 to the TAA 1953. A deferral of payment extends the date for payment without any penalties accruing between the original due date to the deferred due date. We are guided by PS LA 2011/14 - General Debt Collection Powers and Principles when considering requests for additional time to pay. Payment will be deferred where the debtor can demonstrate that are circumstances beyond their control affecting their ability to pay on time, and payment in full can be made at a later date. A list of circumstances which is not exhaustive are outlined; such as natural disasters, legal impediment, and serious illness.
Due the variety of reasons that can lead to a lodgment deferral being requested, and the application of payment deferrals under separate legislative provisions, a payment deferral cannot be automatically applied, nor is it always appropriate to do so.
The circumstances allowing lodgment deferral are not the same for payment deferral. For the ATO there is a risk to timely collection of revenue in automatically granting payment deferrals. Clients / Agents are encouraged to make an estimate of the liability, this information can be sourced from BAS lodged in previous periods.
For further information see the ATOs Services and Support Overview for Agents, click here for your copy.