The Federal Government has released exposure draft legislation and explanatory materials for public consultation on changes to the Pay As You Go (PAYG) system.

Under the proposed changes, large corporates will be required to pay their tax instalments monthly rather than quarterly, as first announced in the 2012-13 Mid-Year Economic and Financial Outlook (MYEFO).

Assistant Treasurer David Bradbury said that the reforms will make the tax system more responsive, efficient and consistent by better matching tax collections with the prevailing economic conditions faced by the business community.

"This change continues the reform of the company tax instalment system that began in the late 1980s and complements other initiatives the Government has announced to address timing disparities in the tax system," said Mr Bradbury.

"In response to the February 2013 consultation paper, submissions identified a number of longer term reforms that would improve the PAYG instalment system.

"I have asked Treasury and the ATO to work with interested parties to consider these longer term issues in detail."

Following public consultation, Treasury will release the final proposals paper later this year.

The Government expects the final phase of these reforms to be legislated in early 2015.

More information can be found here