The ATO has the discretion to vary the amount a payer is required to withhold from a withholding payment, to meet the special circumstances of a particular case.
By completing a PAYG income tax withholding variation, property or other investors may be eligible to have investment deductions effectively refunded during the year through a reduction in tax withholding. Once the application is completed and approved, the ATO will authorise a payer or employer to make the necessary changes to withholding tax deductions.
The effect of this change is that end of year tax refunds are reduced as they are paid during the year in the form of lower tax payments. This additional money may be used to pay for those expenses as they arise or simply to offset interest payments.
PAYG income tax withholding variations are typically used to ease cash flow burdens during the financial year. Taxpayers need to be aware of a couple of other points in relation to variations:
- A new variation must be lodged each year.
- A change in employment means a new variation must be lodged; it does not transfer from employer to employer.
If you have received an instalment from the Tax Office and you think you need to vary the amount, please contact us to arrange this.