Pay As You Go Tax Instalment

When you vary or revise PAYG income tax instalments, it is important not to underestimate your amount, rate, or instalment income. 

The ATO compares your instalments to your total tax payable on your instalment income for the year, and if your instalments are less than 85% of that total, you may be subject to general interest charge on the difference, as well as penalties.

Reasonable circumstances to vary can include:

·         when you no longer expect to have the same level of business income compared to the previous year

·         interest income may be lower because cash was spent

·         you may also not be self-employed anymore, etc

You cannot vary the instalment simply because you don’t want to pay it or because cash flow is tight.

Varying instalments should not be used to defer your tax to the end of the year. If you vary without reason the ATO can backdate interest from the time you should have paid.  In some cases, they will levy penalties as well.

Please contact our office if you require assistance or wish to discuss this further.