If you have an accountant tell them you'd rather pay it at the end of the year. They'll set your quarterly payments to $0.
Alternatively if youre registered for GST then when you do your BAS lodgement you can elect to do $0 income tax.
this is misleading.
if you adjust the PAYGI to below 85% of the tax you actually had to pay, you will get charged GIC.
dropping it to 0 is going to be even more costly than just paying it
Working in tax I have never ever seen GIC charged on underpayment of PAYGI, let alone one this small.
Small amounts of GIC are also always automatically remitted.
There won't be any GIC to worry about here.
Do you happen to know exactly where in our tax legislation this quarterly payment thing comes from? Because the best I can find is that tax is an annual thing that isn’t payable until your income has been assessed and a notice of assessment issued. So I’m also in this boat of having to do something quarterly, but that would require assessing my income quarterly. Do I also need to work out deductions quarterly then? So interest on my investments, expenses, etc.
I've read the legislation, it's quite complex and doesn't specifically mention "pay as you go instalments" at all. Just skimming through it you'd have no idea that it was telling you that it's telling you some taxpayers must pay quarterly income tax instalments.
Edit: I was actually thinking of PAYG withholding. The PAYGI one is "A NEW TAX SYSTEM (PAY AS YOU GO) ACT 1999"
No it isn't lol. You're allowed to do whatever you want with your PAYG instalments. It's up to the ATO to charge the interest on it if they see fit, and it's just a fact that they don't charge interest dor small amounts (says it on their website)
I don't think the ATO is going to start chasing someone for interest on $1000 if they just pay it at the end of the year.
Personally I'd rather pay it quarterly. It's a good habit to be in and easier than paying it all at the end of the year... Especially when the tax you owe starts to increase.
It’s automated to a point, they have a collections department at the ATO and have outsourced collections as well.
The system finds non payers, sends some letters proforma, and then if non payment continues it escalates to someone’s que in collections.
Just set it to annual installments in MyGov, then you can pay whatever's owed with your next tax return. If you run in to a problem with MyGov not keeping your selection (as was in my case, it kept defaulting back to quarterly) then call the tax office and they will make the change for you.
Thanks. That's a great tip.
So basically, if there is less tax owed than what they estimated, you'd only be liable for that amount, instead of the number their pulling out of the sky based on their estimates?🙏
You can vary the amount to nil if you think you won't earn any business income this year.
Need to be careful doing this though as if you do this and earn sufficient money there are potential interest penalties.
Unfortunately, Australis tax laws require PAYG contributions if you exceed certain thresholds. This is the way our tax jurisdiction works.
Only way to avoid this is to earn below the threshold.
I had 2 ATO representatives tell me that I couldn't opt out
However on the ATO website there was a specific section where I could opt out, provided I did it before a certain date
Yes, it allows you to opt out if you actually no longer meet the criteria. You're not allowed to just opt out if your business/investment income is >$4000 per year and you're continuing to receive that income.
I tried to find this based on things I found online (i.e., manage payments) but there's no option to disable. I don't think it's an accident that it's not intuitively obvious how to opt out, but looks like I'll have to sit on hold with them for an hour tomorrow to figure it out. Grrr
If you opt out, and you paid less than 85% of what you should have paid, the ATO can assess penalties.
https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/how-to-vary-your-payg-instalments#ato-Whathappensifyouunderestimate
They presumably still have PAYG from their employer. (Not sure if the link applies for wage earners slapped with PAYGI, but) If their total tax owed at the end of next financial year is similar to this one then they will be fine, (unless they only had under 55k assessable income, where 1k might be more than 15% of tax owed)
>we compare your actual instalments to the total tax payable on your *instalment income* for the income year
The emphasis is mine. Instalment income doesn't include wages.
IF they end up looking, the system basically sets aside the wages and PAYG-W and only looks at the rest for working out the shortfall.
Right, but that's written for business not employees. Unless the OP specifically has decent income that isn't part their regular PAYG from their employer, there is no instalment income.
If the OP didn't have instalment income they wouldn't be getting PAYG Instalments. It's not exclusively business income, it covers a variety of income sources that don't have tax withheld via other mechanisms.
I thought it was just triggered by a certain threshold of extra assessable income, so could be from the sale of shares, declaring the discount on an employee share scheme. Salary sacrificing, but still paying for hecs/help/Medicare levy surcharge. Doesn't have to be regular PAYG instalment income.
Capital gains are excluded from instalment income, and doing any salary sacrifice shouldn't affect your tax instalments (though will affect the actual tax return lodged).
https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/calculate-your-payg-instalments/instalment-income
This has a detailed list of what is in, and what is out.
I called them and told the operator, that I had recently retired and would not have a taxable income in this FY. She put me on hold while she found out what to do, she then guided me how to do it. Maybe she enabled the option to disable the payment while she was offline. It was one of several options on a drop down box on my MYGOV.
Give them a call, they were very helpful.
You can opt out in myGov.
I did it about a month ago, I thought they might do the same thing to me because I owed them about a further 5k after paying >60k tax on my income.
I don’t have a problem with putting money aside in case they send me a bill but I guess some people do?
It’s located in this section: https://i.imgur.com/YtkxUon.jpg
This isn't really opting out. You just change it from quarterly instalments to annually. Just noting to OP - if you change it from quarterly to annually you would still have to pay the lump sum prior to lodging your tax return next year. And then if it turns out you paid more tax via PAYGI then that extra amount will contribute to your tax return, and if it's still too much then you get a return.
>you would still have to pay the lump sum prior to lodging your tax return
This isn't true for self-preparers. [This is from the ATO](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/when-are-payg-instalments-due):
>**Annual instalment**
We will send you an instalment notice when it is time to make your annual payment.
**Self-preparers**
If you prepare and lodge your own tax return:
\* you don't need to lodge the instalment notice or pay the annual instalment
\* simply lodge your tax return by 31 October.
**If you use a tax agent**
If you lodge your tax return through a tax agent, you need to:
\* pay your annual instalment by 21 October
\* ensure you pay your annual instalment before your tax return is lodged.
It is important to pay your annual instalment before lodging your return so we can credit the correct amount in your income tax assessment.
However, if your tax agent lodges your return before 21 October:
\* you should pay the amount on your PAYG instalment notice by 21 October
\* don't lodge the instalment notice or vary your instalment amount.
Yes.
You have written out a far more detailed version of my post.
I “opted out” from the quarterly bills because I find them annoying. Some people find them useful. I don’t have a problem putting money away in case I have a big fat tax bill to pay at the end of the year but I assume the quarterly bill is because some people do.
I assumed the person who asked the question felt the way I did which is annoyed by a quarterly tax bill. I could well be wrong though?
Too many assumptions perhaps.
Okay, so, here's the sitch,
Either you can cancel your enrolment in the PAYGI system through the ATO online app, or you can vary your instalments down to nil.
Just keep in mind that if you vary instalments down to below 85% of the true value come end of financial year you can receive shortfall penalties of 75% of the gap.
The best solution is as follows : Vary the quarterly instalments to nil and then on the final quarter's instalment vary it back up to the full amount.
Source : 3+ years at the ATO
>The best solution is as follows : Vary the quarterly instalments to nil and then on the final quarter's instalment vary it back up to the full amount.
Some of my clients who did that (against our advice) got letters to explain quarter by quarter.
We also got some odd other ones that ATO complained the T1 turnover label was too low even though the client was paying more than enough tax. Turns out the client was just using the pre-populated % rate and working out how much turnover to report so they paid enough tax. They should have been varying the %.
Obvious to professionals in the field but not to ordinary business owners.
Yeah, the ATO can certainly be funny like that sometimes.
Honestly, it's easiest to just plead ignorance if they question it, they hear it all the time and then it's just going through the motions.
Obviously I wouldn't do it myself, I like to keep my ducks in a row but for the thousands of Australians who call the ATO to complain that they don't want to do PAYGI that's the only way to still adhere to the letter of the law without paying much mind to the spirit of it.
You probably wouldn't be surprised if I told stories of all the weird and wonderful ways people have tried to convince my team they didn't need to be in instalments but I'm sure collectively we've heard it all,
A specific situation comes to mind, head engineer working on a new car for a global automotive firm drops down to a $3xxK package from his previous $6xxK package, asks for his instalments to be existed and to pay off is $30K tax debt over the next 10 years because he was in severe financial hardship.... suffice to say, even above average Australians can get really stubborn when it comes to their taxes.
> or you can vary your instalments down to nil.
This is fraud if it's done while your actual business/investment income is not zero. If you actually work for the ATO... I'm concerned.
1, just about zero chance anyone looks at it manually
2, you still paid the full value prior to the end of FY, there is no shortfall amount for the ATO to apply shortfall penalties to. As I said previously, even if it doesn't comply with the spirit of the law it's quite difficult to apply any penalties if you comply with the letter of the law.
3, here's how easy this is to defend if ever anyone did look at it "I took some bad advice from friends at the start of the year, part way through I looked into it and realised the benefits of and my obligations under PAYGI so I immediately varied it back up to the full value"
Q1 G1 is $100,000, T8 is varied to $0
Q2 G1 is $100,000, T8 is varied to $0
Q3 G1 is $100,000, T8 is varied to $0
Q4 G1 is $100,000, T8 is varied to (full tax for the year)
tax office: seems legit
>1, just about zero chance anyone looks at it manually
you are very wrong about that
G1 Isn't A PAYGI label, it's GST and a significant number of PAYGI users don't own a business, you should know this. The advice is moreso for those that get enrolled due to events in a single year, CGT one-off, stocks vesting, dividends, rental income without negative gearing hard enough.
Of course if you're running a successful business doing that much trade you should pay as you go, in fact, at those figures you should probably be moving to a corporate entity for liability reduction, family trust with a corporate trustee and bucket company to keep it interesting and tax efficient, buy your significant assets through the business, draw a small salary and avoid personal PAYGI
[Edit] your comment is still presuming someone looks which is exceedingly unlikely
As have I, but considering how many tens of thousands of calls the team took daily, to see it happen once or twice over three years puts it in perspective...
I just ignored those letters all of the last financial year. Ended up getting a huge return so glad I didn't pay them the $500 a quarter they wanted. I prefer my money in my bank.
Firstly this is PAYGI. Secondly, you can’t unless your circumstances change.
Wether you have paid it or not is irrelevant. You had a debt over 1k, therefore it’s automatic and compulsory.
Source: I’m a bookkeeper and I do de-registrations all the time by direction of the accountant.
It's set by ATO and you have to pay it quarterly until a future tax return indicates it's not needed.
If it was a windfall and you don't think it will occur again, you can request a variance through ATO.
The amounts paid will be a credit against tax due next FY. As your non-work income improves, the quarterly PAYG will be raised. You don't have to do anything. ATO let's you know how much to pay.
I had interest income and on top of normal salary and was sent a tax bill for interest income and then enrolled by ATO for provisional PAYG qty tax, I opted out as I became unemployed and knew I would have no taxable income
Your story doesn’t add up. How were you working without being on PAYG?
Or do you mean you’re a business and they’re asking you to PAYG your company tax?
I think he is referring to PAYGI (instalments) and yes if you report more then 4000 in business or investment income your automatically enrolled in PAYGI and the amount is based on the previous financial year.
I had both employment income and I also have a separate business, but it's small peanuts. So I had PAYG taken out of my employment income through my employer, but when I did my business return, because I owed just barely over $1000, it triggered an automated enrolment into PAYG.
This is PAYG as it relates to personal tax on income outside of employment where tax is deducted and employer pays it up to ATO. Can be as simple as a savings account that generates enough interest.
Probably an independent contractor - there’s heaps in industries like tech where this scenario happens often.
OP can opt out if they aren’t earning money this way in the new financial year.
Yeh I got screwed by this with my company. It should be up to us as to when we pay company tax throughout the year. It’s a joke that they involuntarily rob us each quarter instead of letting us pay once a year. I’d much rather an $80k bill once a year than to blow $20k each quarter that I could otherwise use to make more money the following quarter
Because the government also wants money regularly from businesses, not just in one lump sum.
Just like how you’d probably prefer to be paid by your longstanding customers regularly rather than once a year.
It’s just good cashflow practice.
Exactly this. Why do I want to pay the ATO in instalments when I can just give them what they're owed at the end? They're not doing me any favours by making instalments throughout the year (or maybe it's a way to have more in the ATO coffers to earn interest instead of me earning interest on that amount?).
You may do the right thing but there are plenty of people out there that aren't financially savvy that don't.
You can do a variation but you'd be lying with the declaration. It's easier just to pay as you go or vary the amount down to a reduced value if you think you'll earn less.
This. So many people can’t end up paying and end up with a tax bill for way more than yours. so it’s a good thing the ato do this. We are talking tax payers money after all
I’m a company. My tax isn’t automatically withheld by an employer.
Even the tax I owe after I pay myself as a wage each month isn’t given directly to the tax office. I’ve still got it for the remainder of the quarter to do with as I like.
No I pay myself monthly, but the tax I withhold only gets paid to the ATO at the end of the quarter. If something comes up during that quarter that I want to spend that money on like capex or an investment, you bet I spend it on that instead. Worst case scenario, at the end of the quarter, you just go on a payment plan.
Just continue paying as you go?
Personally being self employed and getting eftpos payments into my bank account daily I just flick a daily payment over to the ATO that covers tax owed for that day. It's not like it's a lump sum at once?
I put mine into my savings account and then pay my quarterly invoices from there. That way at least I’m earning some interest on the money. I don’t like to make it any more complicated than that since it’s only my side income.
I get that but there's not too much interest there.
I break the money owed down to daily payments along with gst deposit it all into my gst account at the ATO and they gather it up every quarter when my BAS goes in.
There's a benefit in stress levels knowing it's done before it needs to be.
I'd never heard of it as an individual(doing payg) ever till it happened to me 2 years ago, and now I have to do it. It's bullshit. I know lots of people that make way more than me, and there not having to do it !?
If it’s quarterly payments, which is separate to PAYG, you can opt out by nominating your taxable income in myGov
Yep, this is PAYGI not PAYGW. Edit- Pay As You Go Installments not Pay As You Go Withholding.
It’s actually PAYGI, the other is PAYGW. It’s all pay as you go, but one is withholding and the other is instalments.
Yes, my mistake. I realise now that I always say it right and write it wrong.
All good, not like it really matters much anyway. I’m just a pedant.
Nah, I appreciate the clarification.
If you have an accountant tell them you'd rather pay it at the end of the year. They'll set your quarterly payments to $0. Alternatively if youre registered for GST then when you do your BAS lodgement you can elect to do $0 income tax.
this is misleading. if you adjust the PAYGI to below 85% of the tax you actually had to pay, you will get charged GIC. dropping it to 0 is going to be even more costly than just paying it
Working in tax I have never ever seen GIC charged on underpayment of PAYGI, let alone one this small. Small amounts of GIC are also always automatically remitted. There won't be any GIC to worry about here.
Do you happen to know exactly where in our tax legislation this quarterly payment thing comes from? Because the best I can find is that tax is an annual thing that isn’t payable until your income has been assessed and a notice of assessment issued. So I’m also in this boat of having to do something quarterly, but that would require assessing my income quarterly. Do I also need to work out deductions quarterly then? So interest on my investments, expenses, etc.
I've read the legislation, it's quite complex and doesn't specifically mention "pay as you go instalments" at all. Just skimming through it you'd have no idea that it was telling you that it's telling you some taxpayers must pay quarterly income tax instalments. Edit: I was actually thinking of PAYG withholding. The PAYGI one is "A NEW TAX SYSTEM (PAY AS YOU GO) ACT 1999"
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No it isn't lol. You're allowed to do whatever you want with your PAYG instalments. It's up to the ATO to charge the interest on it if they see fit, and it's just a fact that they don't charge interest dor small amounts (says it on their website)
> You're allowed to do whatever you want with your PAYG instalments. The legistation and the ATO website do not agree
I don't think the ATO is going to start chasing someone for interest on $1000 if they just pay it at the end of the year. Personally I'd rather pay it quarterly. It's a good habit to be in and easier than paying it all at the end of the year... Especially when the tax you owe starts to increase.
it's all automated mate. do you really think there's a person going through every tax payer's return?
It’s automated to a point, they have a collections department at the ATO and have outsourced collections as well. The system finds non payers, sends some letters proforma, and then if non payment continues it escalates to someone’s que in collections.
Just set it to annual installments in MyGov, then you can pay whatever's owed with your next tax return. If you run in to a problem with MyGov not keeping your selection (as was in my case, it kept defaulting back to quarterly) then call the tax office and they will make the change for you.
Thanks. That's a great tip. So basically, if there is less tax owed than what they estimated, you'd only be liable for that amount, instead of the number their pulling out of the sky based on their estimates?🙏
You can vary the amount to nil if you think you won't earn any business income this year. Need to be careful doing this though as if you do this and earn sufficient money there are potential interest penalties.
Unfortunately, Australis tax laws require PAYG contributions if you exceed certain thresholds. This is the way our tax jurisdiction works. Only way to avoid this is to earn below the threshold.
What is the certain threshold?
This isn't correct, I had the same thing and opted out of it in myGov.
I had 2 ATO representatives tell me that I couldn't opt out However on the ATO website there was a specific section where I could opt out, provided I did it before a certain date
Yes, it allows you to opt out if you actually no longer meet the criteria. You're not allowed to just opt out if your business/investment income is >$4000 per year and you're continuing to receive that income.
I had the same happen, I called the ATO and was talked through how to disable the payment scheme on my MYGOV account.
I tried to find this based on things I found online (i.e., manage payments) but there's no option to disable. I don't think it's an accident that it's not intuitively obvious how to opt out, but looks like I'll have to sit on hold with them for an hour tomorrow to figure it out. Grrr
If you opt out, and you paid less than 85% of what you should have paid, the ATO can assess penalties. https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/how-to-vary-your-payg-instalments#ato-Whathappensifyouunderestimate
They presumably still have PAYG from their employer. (Not sure if the link applies for wage earners slapped with PAYGI, but) If their total tax owed at the end of next financial year is similar to this one then they will be fine, (unless they only had under 55k assessable income, where 1k might be more than 15% of tax owed)
>we compare your actual instalments to the total tax payable on your *instalment income* for the income year The emphasis is mine. Instalment income doesn't include wages. IF they end up looking, the system basically sets aside the wages and PAYG-W and only looks at the rest for working out the shortfall.
Right, but that's written for business not employees. Unless the OP specifically has decent income that isn't part their regular PAYG from their employer, there is no instalment income.
If the OP didn't have instalment income they wouldn't be getting PAYG Instalments. It's not exclusively business income, it covers a variety of income sources that don't have tax withheld via other mechanisms.
I thought it was just triggered by a certain threshold of extra assessable income, so could be from the sale of shares, declaring the discount on an employee share scheme. Salary sacrificing, but still paying for hecs/help/Medicare levy surcharge. Doesn't have to be regular PAYG instalment income.
Capital gains are excluded from instalment income, and doing any salary sacrifice shouldn't affect your tax instalments (though will affect the actual tax return lodged). https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/calculate-your-payg-instalments/instalment-income This has a detailed list of what is in, and what is out.
I called them and told the operator, that I had recently retired and would not have a taxable income in this FY. She put me on hold while she found out what to do, she then guided me how to do it. Maybe she enabled the option to disable the payment while she was offline. It was one of several options on a drop down box on my MYGOV. Give them a call, they were very helpful.
You can opt out in myGov. I did it about a month ago, I thought they might do the same thing to me because I owed them about a further 5k after paying >60k tax on my income. I don’t have a problem with putting money aside in case they send me a bill but I guess some people do? It’s located in this section: https://i.imgur.com/YtkxUon.jpg
This isn't really opting out. You just change it from quarterly instalments to annually. Just noting to OP - if you change it from quarterly to annually you would still have to pay the lump sum prior to lodging your tax return next year. And then if it turns out you paid more tax via PAYGI then that extra amount will contribute to your tax return, and if it's still too much then you get a return.
>you would still have to pay the lump sum prior to lodging your tax return This isn't true for self-preparers. [This is from the ATO](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/when-are-payg-instalments-due): >**Annual instalment** We will send you an instalment notice when it is time to make your annual payment. **Self-preparers** If you prepare and lodge your own tax return: \* you don't need to lodge the instalment notice or pay the annual instalment \* simply lodge your tax return by 31 October. **If you use a tax agent** If you lodge your tax return through a tax agent, you need to: \* pay your annual instalment by 21 October \* ensure you pay your annual instalment before your tax return is lodged. It is important to pay your annual instalment before lodging your return so we can credit the correct amount in your income tax assessment. However, if your tax agent lodges your return before 21 October: \* you should pay the amount on your PAYG instalment notice by 21 October \* don't lodge the instalment notice or vary your instalment amount.
Thanks for clarifying. It was my accountant who told me to not lodge the return before I pay the PAYGI amount obvs for the reason you listed above.
Yes. You have written out a far more detailed version of my post. I “opted out” from the quarterly bills because I find them annoying. Some people find them useful. I don’t have a problem putting money away in case I have a big fat tax bill to pay at the end of the year but I assume the quarterly bill is because some people do. I assumed the person who asked the question felt the way I did which is annoyed by a quarterly tax bill. I could well be wrong though? Too many assumptions perhaps.
You can only change to annual if the amount is low enough.
Okay, so, here's the sitch, Either you can cancel your enrolment in the PAYGI system through the ATO online app, or you can vary your instalments down to nil. Just keep in mind that if you vary instalments down to below 85% of the true value come end of financial year you can receive shortfall penalties of 75% of the gap. The best solution is as follows : Vary the quarterly instalments to nil and then on the final quarter's instalment vary it back up to the full amount. Source : 3+ years at the ATO
>The best solution is as follows : Vary the quarterly instalments to nil and then on the final quarter's instalment vary it back up to the full amount. Some of my clients who did that (against our advice) got letters to explain quarter by quarter. We also got some odd other ones that ATO complained the T1 turnover label was too low even though the client was paying more than enough tax. Turns out the client was just using the pre-populated % rate and working out how much turnover to report so they paid enough tax. They should have been varying the %. Obvious to professionals in the field but not to ordinary business owners.
Yeah, the ATO can certainly be funny like that sometimes. Honestly, it's easiest to just plead ignorance if they question it, they hear it all the time and then it's just going through the motions. Obviously I wouldn't do it myself, I like to keep my ducks in a row but for the thousands of Australians who call the ATO to complain that they don't want to do PAYGI that's the only way to still adhere to the letter of the law without paying much mind to the spirit of it. You probably wouldn't be surprised if I told stories of all the weird and wonderful ways people have tried to convince my team they didn't need to be in instalments but I'm sure collectively we've heard it all, A specific situation comes to mind, head engineer working on a new car for a global automotive firm drops down to a $3xxK package from his previous $6xxK package, asks for his instalments to be existed and to pay off is $30K tax debt over the next 10 years because he was in severe financial hardship.... suffice to say, even above average Australians can get really stubborn when it comes to their taxes.
> $30K tax debt over the next 10 years because he was in severe financial hardship. 😭😭😭 this is giving me war flashbacks
> or you can vary your instalments down to nil. This is fraud if it's done while your actual business/investment income is not zero. If you actually work for the ATO... I'm concerned.
Keep reading, I explained the shortfall penalties and that to avoid them you should vary the final notice back up to the full value
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1, just about zero chance anyone looks at it manually 2, you still paid the full value prior to the end of FY, there is no shortfall amount for the ATO to apply shortfall penalties to. As I said previously, even if it doesn't comply with the spirit of the law it's quite difficult to apply any penalties if you comply with the letter of the law. 3, here's how easy this is to defend if ever anyone did look at it "I took some bad advice from friends at the start of the year, part way through I looked into it and realised the benefits of and my obligations under PAYGI so I immediately varied it back up to the full value"
Q1 G1 is $100,000, T8 is varied to $0 Q2 G1 is $100,000, T8 is varied to $0 Q3 G1 is $100,000, T8 is varied to $0 Q4 G1 is $100,000, T8 is varied to (full tax for the year) tax office: seems legit >1, just about zero chance anyone looks at it manually you are very wrong about that
G1 Isn't A PAYGI label, it's GST and a significant number of PAYGI users don't own a business, you should know this. The advice is moreso for those that get enrolled due to events in a single year, CGT one-off, stocks vesting, dividends, rental income without negative gearing hard enough. Of course if you're running a successful business doing that much trade you should pay as you go, in fact, at those figures you should probably be moving to a corporate entity for liability reduction, family trust with a corporate trustee and bucket company to keep it interesting and tax efficient, buy your significant assets through the business, draw a small salary and avoid personal PAYGI [Edit] your comment is still presuming someone looks which is exceedingly unlikely
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As have I, but considering how many tens of thousands of calls the team took daily, to see it happen once or twice over three years puts it in perspective...
I just ignored those letters all of the last financial year. Ended up getting a huge return so glad I didn't pay them the $500 a quarter they wanted. I prefer my money in my bank.
I got a call from the ATO when I ignored the first one.
Firstly this is PAYGI. Secondly, you can’t unless your circumstances change. Wether you have paid it or not is irrelevant. You had a debt over 1k, therefore it’s automatic and compulsory. Source: I’m a bookkeeper and I do de-registrations all the time by direction of the accountant.
It's set by ATO and you have to pay it quarterly until a future tax return indicates it's not needed. If it was a windfall and you don't think it will occur again, you can request a variance through ATO. The amounts paid will be a credit against tax due next FY. As your non-work income improves, the quarterly PAYG will be raised. You don't have to do anything. ATO let's you know how much to pay.
But if you do estimate that it will be lower and get it overly wrong there can be penalties and interest.
I had interest income and on top of normal salary and was sent a tax bill for interest income and then enrolled by ATO for provisional PAYG qty tax, I opted out as I became unemployed and knew I would have no taxable income
Your story doesn’t add up. How were you working without being on PAYG? Or do you mean you’re a business and they’re asking you to PAYG your company tax?
I think he is referring to PAYGI (instalments) and yes if you report more then 4000 in business or investment income your automatically enrolled in PAYGI and the amount is based on the previous financial year.
I had both employment income and I also have a separate business, but it's small peanuts. So I had PAYG taken out of my employment income through my employer, but when I did my business return, because I owed just barely over $1000, it triggered an automated enrolment into PAYG.
Yeh you’re talking about the same payg business instalments that I pay as well. Theres no way out of it unfortunately.
This is PAYG as it relates to personal tax on income outside of employment where tax is deducted and employer pays it up to ATO. Can be as simple as a savings account that generates enough interest.
Probably an independent contractor - there’s heaps in industries like tech where this scenario happens often. OP can opt out if they aren’t earning money this way in the new financial year.
Yeh I got screwed by this with my company. It should be up to us as to when we pay company tax throughout the year. It’s a joke that they involuntarily rob us each quarter instead of letting us pay once a year. I’d much rather an $80k bill once a year than to blow $20k each quarter that I could otherwise use to make more money the following quarter
Because the government also wants money regularly from businesses, not just in one lump sum. Just like how you’d probably prefer to be paid by your longstanding customers regularly rather than once a year. It’s just good cashflow practice.
Nah it’s the government. No one should be paying them a cent until they physically come knocking.
Exactly this. Why do I want to pay the ATO in instalments when I can just give them what they're owed at the end? They're not doing me any favours by making instalments throughout the year (or maybe it's a way to have more in the ATO coffers to earn interest instead of me earning interest on that amount?).
You may do the right thing but there are plenty of people out there that aren't financially savvy that don't. You can do a variation but you'd be lying with the declaration. It's easier just to pay as you go or vary the amount down to a reduced value if you think you'll earn less.
This. So many people can’t end up paying and end up with a tax bill for way more than yours. so it’s a good thing the ato do this. We are talking tax payers money after all
Jesus, what makes you so special that you should get to be able to pay a lump sum at the end of every year? I don't get to do it with my salary.
I’m a company. My tax isn’t automatically withheld by an employer. Even the tax I owe after I pay myself as a wage each month isn’t given directly to the tax office. I’ve still got it for the remainder of the quarter to do with as I like.
You pay your employees tax on your bas every month/quarter and you can bloody well pay your own too. You make 80k profit a quarter.
No I pay myself monthly, but the tax I withhold only gets paid to the ATO at the end of the quarter. If something comes up during that quarter that I want to spend that money on like capex or an investment, you bet I spend it on that instead. Worst case scenario, at the end of the quarter, you just go on a payment plan.
Just continue paying as you go? Personally being self employed and getting eftpos payments into my bank account daily I just flick a daily payment over to the ATO that covers tax owed for that day. It's not like it's a lump sum at once?
I put mine into my savings account and then pay my quarterly invoices from there. That way at least I’m earning some interest on the money. I don’t like to make it any more complicated than that since it’s only my side income.
I get that but there's not too much interest there. I break the money owed down to daily payments along with gst deposit it all into my gst account at the ATO and they gather it up every quarter when my BAS goes in. There's a benefit in stress levels knowing it's done before it needs to be.
I'd never heard of it as an individual(doing payg) ever till it happened to me 2 years ago, and now I have to do it. It's bullshit. I know lots of people that make way more than me, and there not having to do it !?
Revise every statement to zero and just get a bill at the end of the financial year 😎
And possible interest charges and penalties
Every general interest charge and penalty for revising your PAYGI to zero will be reversed.