Is your tax reserve enough? Check savings against the bills
Check a tax reserve by comparing the money available with the tax still expected to be paid. Keep each taxpayer and tax type separate, use dated estimates, and check whether those estimates already allow for instalments. A savings balance alone doesn't tell you whether the next bill is covered.
What you’ll get from this guide: A dated worksheet showing the provision still needed and the estimates your tax agent needs to confirm.
- Compare savings with the remaining bills, using the same reporting date.
- Record whether each estimate is before or after credits.
- Keep an unpaid instalment debt visible without counting it twice.
Two bills arriving together can expose a shortfall in a separate tax account. This worksheet helps owners check the actual provision, using estimates supplied by their registered tax agent and amounts visible in their records.
Put the estimates on the same footing
Write the review date, taxpayer and period beside every amount. Your company's income tax and your personal income tax belong to different taxpayers. Keep separate worksheets even if you manage both from the same banking app.
Ask for an estimate that states what is included: GST, income tax, pay as you go (PAYG) instalments, or an existing debt. Record the estimate date and whether payments or credits have already reduced it. The PAYG instalments guide explains the system; this worksheet checks the numbers you have been given.
An old estimate can become misleading after a change in profit, a large purchase or an adjustment to a lodged return. Mark the input as needing an update rather than treating the bank balance as proof that you're on track.
Fictional owner example. These estimates and credits have already been confirmed for the relevant taxpayer and periods.
| Tax type | Estimate before listed credits | Confirmed credits | Still to provide |
|---|---|---|---|
| GST | $6,000 | $4,000 | $2,000 |
| Income tax | $12,000 | $3,000 | $9,000 |
| Total | $18,000 | $7,000 | $11,000 |
| Savings available | $9,500 | ||
| Shortfall | $1,500 |
The $3,000 income-tax credit is included once. If an agent instead supplies a net $9,000 estimate, use $9,000 directly and do not subtract $3,000 again.
Separate tax credits from money in the bank
Money transferred into your savings account is still in your bank. It hasn't reached the Australian Taxation Office (ATO). Match actual ATO payments and credits to the relevant account before using them in the calculation. The ATO's account and payments guidance explains the records available for this check.
PAYG amounts already allowed for in an income-tax estimate must not be deducted again. An instalment can also remain an unpaid debt. Ask the agent to show both the remaining assessment estimate and any unpaid instalment separately, explaining how the credit has been treated. Don't add a gross income-tax estimate to all instalments without that reconciliation.
If the accounts disagree, work through the ATO account reconciliation first. Leave an unconfirmed transfer in the question column. Counting it as paid because you intended to make the payment hides a cash shortfall.
Allocate the savings once
In the example, $9,500 cannot cover an $11,000 provision. There is a $1,500 gap. That calculation says nothing about which bill to pay first; the due dates and cash forecast are still needed.
List any other promises against the same savings, such as an annual insurance premium. Reduce the available amount for money already committed elsewhere. Equally, don't count the same reserve account in both the company worksheet and the owner's personal worksheet.
Add the bills to your cash-flow forecast by payment date. Check what happens if the next customer receipt arrives late. A percentage transferred from sales may be a useful habit, but it needs to be checked against current estimates rather than assumed to cover everything.
Keep a short review trail
Copy the tax-reserve worksheet
Copy this blank template into your own files. Your records stay with you.
Save the worksheet with the bank balance evidence, estimate and account transactions used. Record what changed at the next review. If a bill is approaching and the forecast doesn't cover it, gather the account details and prepare a payment-plan discussion promptly.
Key takeaways
- Compare savings with the remaining bills, using the same reporting date.
- Record whether each estimate is before or after credits.
- Keep an unpaid instalment debt visible without counting it twice.
Where to get help
Ask your registered tax agent to confirm the remaining estimates, credits and unpaid debts. Use the ATO's PAYG lodgement and payment guidance for the official process.
Where to go from here
How to reconcile an ATO account statement with your books
Confirm account movements before counting credits.
3 min readPrepare for an ATO payment plan: records and cash capacity
Prepare a forecast if the confirmed bills exceed available cash.
3 min readPAYG Instalments Explained: Why the ATO Wants Tax Early
Explore a related question linked in this guide.
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General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — check the official sources linked in this guide and get qualified advice where your circumstances require it.