In general terms an individual or entity will enter in the Australian Taxation Offices (ATO’s) PAYG Tax Instalment system, if they have a tax payable position in their most recently lodged Income Tax Return that is the result of income other than salary.
The instalment amount is generally split over four quarters and is calculated by the ATO as the previous years tax payable plus an incremental adjustment upwards. Upon lodgement of your Income Tax Return, instalments paid in advance during that year are applied as a credit towards the tax payable in the current years Income Tax Return.
If you believe your instalment amount provided by the ATO is too high it is possible to alter your PAYG Instalments in line with a reduced earning position in the current year.
Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.