PAYG withholding variations

PAYG withholding variations

PAYG withholding variations should be used when the payee (the person receiving a payment) wants to reduce their  withholding rate for the year ending 30 June. If this is you, please read further or call the office.

The main purpose of varying your rate or amount of withholding is to make sure that the amount withheld during the income year best meets your end-of-year tax liability. For example, if the normal rate of withholding leads to a large credit at the end of the income year because your tax-deductible expenses are higher than normal, you may want to vary your withholding.

The processing time for an application is around 28 days and you must be able to meet the following criteria:-

• have lodged all required tax returns and activity statements
• did not receive a debit assessment on your last tax assessment
• do not have any outstanding tax debt owing to the Australian Government
• do not have any outstanding debts with the ATO

Non-commercial losses

If you have a net loss from a business activity you carry on as an individual, either as a sole trader or in partnership, the non-commercial loss rules will apply.

These rules determine if you can use your business loss to offset income from other sources. You can only offset your loss against assessable income from other sources if one or more of the following applies:

• one of the exceptions for primary production or professional arts businesses apply
• you meet the income requirement, and one of the four tests is satisfied – profits test, assessable income test, other assets test, real property test
• the Commissioner has exercised his discretion to allow you to claim the loss.

If you do not satisfy the above criteria, you must defer the loss to a future year when both of the following apply:

• there is a profit from the business activity or a similar activity
• you meet the income requirement and satisfy one of the tests.

The ATO may require more information from you before or after your application is processed. If you fail to provide this, your application may not be approved.

Your variation will finish on the expiry date shown on the notice of withholding variation provided by the ATO.

For more information or you are Thinking a PAYG withholding variation application, please give us a call on 02 4933 6888 or 1300 788 491.

Source:- www.ato.gov.au