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Annual PAYG installment

Discussion in 'Accounting & Tax' started by James Hill, 28th Jun, 2016.

  1. James Hill

    James Hill Active Member

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    Hi Guys

    I'm new to payg installements system and a bit confused on timings.
    I have a question of when to pay my annual PAYG installment (around $2K) that is due Oct 2016.

    If I do my tax return in July 2016 then get my notice of assesment bill (say around $2.5K) which is normally due for payment in March 2017

    Do I still need to pay the $2K PAYG installment by Oct 2016 and then pay the remainder $500 at March 2017?

    I assume so as I found this info on the ato website

    Annual instalments | Australian Taxation Office

    "If you've already lodged your tax return before paying your PAYG instalment, you still need to pay by 21 October."

    Or is it less confusing to just pay the annual PAYG installment now before I do my tax return?

    Or is it safe to ignore the $2K installment by Oct 2016 and can leave paying anything at all this year and pay the whole lot at March 2017 ($2.5K)?

    Thanks all for your thoughts :)
     
  2. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Perhaps. When you do the return it will indicate tax due. Knowing that you can make decisions about variation down so that you can precisely determine the instalment. Timing of tax payments too.

    There are strategies to defer tax here. Using an agent until even June 2017. Take care as penalties can also occur if done incorrectly.
     
  3. James Hill

    James Hill Active Member

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    Cheers and thanks for the thoughts,Much appreciated

    Would the "no frills simplest" way most do this would be to pay the PAYG annual installment first this yr ($2K), then do the tax return that indicates ($2.5K in tax payable), get notice of assesement (crediting the $2K already paid and thus balance outstanding is $500) and pay that $500 remainder by due date next yr? Correct?
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    That is correct. Depends if the estimated tax is more or less than notice. If it was say $1,500 you would vary down to $1500 and pay in October. Then when lodge the notice should be for $1 due or $1 refund or something similiar.

    Remember too that lodging return will revise the 2017 year instalment. Maybe Nil ?
     
  5. James Hill

    James Hill Active Member

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    Location:
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    Thanks very much for the explanation, makes sense, Cheers!