The ATO has stated that from March 2022, they will be automatically identifying, calculating and paying Interest in Early Payments (IEP) entitlements. Any funds you receive will be directly placed into the bank account that you have nominated.
If payments for certain liabilities are made to the ATO 14 or more days before they are due, then businesses are entitled to interest on them. Automatic IEP entitlements will be calculated from the 1st July 2021.
From the 14th March 2022, IEP payments from the ATO will be made for the period between 1st July 2021 and 13th March 2022. For any eligible payments after the 14th March 2022, it will take about 2 weeks from the due date of the liability for interest to hit your bank account.
For those individuals who have existing tax debt, then this IEP entitlement will automatically go to offset this debt. Excess IEP amounts will then go into the nominated bank account.
If you’re curious as to what it is you might be entitled to, be aware that the ATO will notify you of any amount when it is paid or used to offset a debt.
This change by the ATO means that we here at Accounting Tax Solutions no longer need to manually request payments for future IEP entitlements on your behalf. Beforehand, we would need to contact the ATO, or if you did not have a tax professional managing your financial affairs, it would be something you would need to do yourself.
It is important to note that IEP is an assessable income, so it needs to be declared for the financial year that it was received or used to offset a tax debt. There are several liabilities that are included in the IEP scheme.
By paying any of these liabilities 14 or more days earlier than their due date, then you will be entitled to interest from the ATO.
- Income tax (including Medicare levy and Medicare levy surcharge)
- Compulsory Higher Education Loan Program (HELP) repayments
- Compulsory Vocational Education and Training Student Loan (VETSL) repayments
- Student Financial Supplement Scheme (SFSS) assessment debts
- Compulsory Student Start-up Loan (SSL) repayments
- Compulsory ABSTUDY Student Start-up Loan (SSL) repayments
- Compulsory Trade Support Loan (TSL) debt repayments
- Interest on distributions from non-resident trust estates
- Shortfall interest charge (SIC)
Please get in touch with one of our advisors from Accounting Tax Solutions if you have any questions regarding this change from the ATO or any other finance related queries you may have regarding your business. Our experienced team is here to help. Call us on 07 5559 1200