Pay as you go (PAYG) installments are a regular payments making system towards your expected annual income tax liability. It only applies to you if you earn business and investment income over a certain amount.
If you pay PAYG installments, you still need to lodge an annual tax return. You will be notified if you need to start paying in installments under the PAYG installment system. Before your PAYG installments are due, we will also send you an activity statement or installment notice, depending on your circumstances. As an individual involved in the business as a sole trader, you can view, lodge, pay, & manage your PAYG installment obligations online if you have a myGov account linked to the ATO.
The Commissioner of Taxation might vary the amount required to withhold from a withholding payment, to meet the special circumstances of a particular case or class of cases. The main purpose of varying the rate or amount of withholding ensures that the amounts are withheld during the income year; to meet your end-of-year tax liability. For instance, the normal rate or amount of withholding would lead to a large credit at the end of the income year because your tax-deductible expenses might be higher than normal.
You can request for an increase or decrease in the rate or amount of withholding. If you believe your circumstances warrant a variation of the rate or amount of withholding, you need to determine whether the variation is upwards or downwards. The granting of a variation does not mean that we have accepted the treatment of the income tax and deductions in your application. Your actual tax liability will be decided when you lodge the tax return. Under that tax laws, you must keep relevant records of your income and expenditure for a minimum of five years.
How to apply for an upward variation?
You can apply for an upward variation by agreeing with your payer to vary the rate or amount of withholding. Your request has to be in writing, but can be in any format. You can send an email request, or you can use a paper or computer-based form.
How to apply for a downward variation?
If you want to vary the withholding amount downwards, you need to lodge a PAYG withholding variation application form. This is a transmittable form that has to be lodged online. For more information & to use the form, you can refer to PAYG withholding variation application known as e-variation. Lodging e-variation, rather than a paper application, reduces the time taken to process the application. If you are looking for advice regarding any matter like XERO Bookkeeping East Melbourne, the call us now. We are happy to help you out.