I dont want to pay PAYG instalments

My junior accountant just did my tax return. I gave him all figures for my Investment property etc.

I had been paying PAYG instalments since last year and asked him if I could stop doing this and pay at each tax assessment annually instead.

He said:
''The estimate of your PAYG for 2015 is $2200 annually. However I take back what I said and you may be able to not pay your PAYG if you satisfy any of the following. I just called the ATO to clarify the definition of point one as I thought it was on tax payable (and therefore you would not have satisfied)
? the adjusted balance of assessment on your most recent notice of assessment is less than $1,000

? your notional tax is less than $500

? you are entitled to the seniors and pensioners tax offset.

You do have $1400 payable but with your tax instalments paid it reduces this to $2200. Therefore you would satisfy point one. What will happen though is that the following year you would go over the $1000 tax payable again if your situation stays the same and therefore would go back onto installments. I hope this makes sense.''

Actually it doesnt make sense to me. Thought I would double check with the esteemed experts on this forum before I get back to him.

Is his advice correct?
thanks
 
I recently looked into this on the ATO website just so i could cut down some paperwork but I'm not eligible. Cheers, nat

From ATO website:
Am I eligible to pay my instalments annually?

The annual instalment is a single, lump sum payment of your PAYG liability for the year. You may be eligible to pay using the annual instalment option if, at the end of your first instalment quarter in the income year, you meet the following criteria:
your most recent notional tax# as advised by the ATO is less than $8,000
you are registered for the goods and services tax (GST), and you report and pay GST annually
you are a partner in a partnership registered for the GST, and the partnership reports and pays GST annually
in the case of a company, you are not part of an instalment group*, a participant in a GST joint venture, or a head company of a consolidated group.
If our records indicate that you meet these criteria, we will write to you advising you how to select the annual payment option.
# Generally speaking, notional tax is the tax that would have been payable on your business and investment income (excluding capital gains) in your latest income tax assessment based on current income tax rates. We notify you of this amount.
* An instalment group is a group of companies controlled by a head company, unlike consolidated groups, which can include trusts/partnerships as well as companies.
 
As a tax agents I get asked this question all the time. NOBODY wants to pay PAYG Instalments. But fact is unless you are in an exempt category (ie Senior Australian) then you are obligated to pay instalments. There are offences if you don't.

When you are dragged into the PAYGI system the ATO gives up to two options. You choose the option in some cases on the first notice each FY.
1. A set instalment; or
2. An instalment rate.
You can choose one which gives the lower value..no issues. The instalment method is fairly straight fwd...The rate can also be very good too. Varying it is a bit more complex and requires some maths skills.

You can also choose to vary any or all instalments. You can vary to zero BUT...If your estimate results in underpaying tax you can have a penalty plus interest imposed. Best avoided.

If the ATO want you to pay $800 a qtr and you feel it should be perhaps $300 then vary away. But you must do it BEFORE the due date or it wont be accepted - No excuses are accepted.

The reference to "junior accountant" concerns me. Long explanation for a simple issue. You don't meet the $1k threshold test. Simple maths ...$1400 is more than $1,000.

Q : Are you claiming depn and CA ?? I often find clients who aren't claiming this who could increase deductions and thus avoid PAYG. You may also be able to amend last few years too and claw back some cash.
 
Back
Top