ATO Client Accounts

How the ATO runs its client accounts is a mystery to most people. Today we will have a stab at demystifying the subject.

The ATO has many different types of client accounts.

  • Income Tax Account
  • Integrated Client Account
  • HELP or similar (student loan account)
  • Insolvency Account
  • Legal Account
  • SGC Account

You will no doubt be pleased to know that in our opinion no one understands them all; because not least of which ATO staff use some of them differently and the ATO regularly changes policy.

Today we will focus on the two primary accounts, the first two on our list above and in place for many individuals.

Income Tax Account – Every individual and company (we know of) has one of these. As a general rule of thumb, this account will be debited with any amount you owe and credited with any amount owing to you from the lodgement of your tax return. So, for the most part, it only comes into play once per year. Other entries on this account may include penalties for failure to lodge or interest on late payment. If you get these charges, always contact us as there are many grounds for remission (forgiveness).

Integrated Client Account – Also known as the Running Balance Account or BAS Account. If you have any of the following interactions with the tax system you will have one of these accounts.

  • Non-salary income
  • Goods and Services Tax
  • Employee Pay-As-You-Go withholding

Non-salary income – usually from investment or business income, gives rise to Pay-As-You-Go income tax instalments. The government likes its money regularly; so if your income has not had tax withheld by your employer, this is how it gets its regular tax fix. How this is calculated is worthy of an article on its own and there are many variations that depend on individual circumstances. Suffice to say that the ATO relies on the last lodged income tax return to calculate this commitment. Therefore, if you have large changes in your non-salary income you can end up with an inaccurate amount. If this is the case, talk to us as there are remedies. The amounts you pay via this mechanism are credited against your next tax return in the same way any employee tax withheld is treated.

Goods and Services Tax – This is familiar to most business people. You collect tax on behalf of the government and pay it to the government. Any GST you pay is credited against collections.

Employee Pay-As-You-Go withholding – If you employ staff, you must deduct this tax and remit it to the government.

This is as brief as we can get this topic and there is a huge amount of detail that we haven’t covered. If you have any queries on this subject speak to any of our technical staff on why you have a particular transaction on one of your accounts. Contact us on 07 3483 0100.

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