Posts made in August, 2018

PAYG Instalments Comments Off on PAYG Instalments

PAYG Instalments

Are you confused by one of these letters from the ATO???   Why did you receive it? This letter is generally triggered by the lodgement of a tax return with a tax bill of more than $1,000. This tax bill is often due to positively geared investment properties and/or business profits from sole traders, trusts, or partnerships. Unlike your salary from your employer who withholds tax from your wages, the above income does not automatically have tax withheld from it during the year. This means that you’ll pay all the tax on this extra income when you lodge your tax return. Unfortunately this can often mean that you end up with a very high tax bill. Therefore, the ATO requests that in the future you pay this tax in smaller instalments leading up to the lodgement of your next tax return.   What does it mean for you? First, the ATO will send you a letter similar to the above to notify you that you are being put into the Pay As You Go Installment (PAYGI) system. The notional tax is your estimated tax bill for the next year. It will be estimated slightly higher than the tax bill from the tax return just lodged. This figure will then...

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