Reducing weekly income tax

Discussion in 'Accounting & Tax' started by mickell, 5th Oct, 2018.

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  1. mickell

    mickell Member

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    Hello, I am looking for info or an explanation on recieving weekly tax benefits in pay throughout the year compared to getting it in tax returns at end of finacial year from investment properties?
     
  2. Zoolander

    Zoolander Well-Known Member

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    I’m no tax expert so seek expert advice.

    Normally you get a smaller payslip. Get more back at tax time once your investment property losses are factored in. Employer doesnt know/care about your other properties.

    A withholding variation form can allow your employer to withold less but claim less back at tax time, or pay extra tax. Depends how accurate you were.
     
  3. Ross Forrester

    Ross Forrester Well-Known Member

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    Look up the NAT 2036 form.

    If you google that you will find it.
     
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  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A PAYG Withholding variation allows you to self assess your 2019 rental position etc and then the ATO passes on a lesser amount of tax withholding. It means you lose the year end tax refund lump sum (most of it) for less tax each pay period.

    Its only as good as your estimates and can leave a tax debt if its poorly estimated. It means you need to set aside and save the weekly/ FN / Monthly tax savings or you are just spending it. And sometimes its just a waste of time.

    Expires if you change jobs, can be adversely affected if you get overtime, bonues or a payrise. And if you get a CGT sum it may even be a waste of time.
     
  5. AlyshaH

    AlyshaH New Member

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    I'd be conservative in your figures. Over estimate rent and under estimate expenses, to be on the safe side.
     
  6. mickell

    mickell Member

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    Ah thanks Paul. So when would this be a good option to use then? And so by the sound of it, it would work out roughly the same if done correctly over a full year?
     
  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I use a rule of thumb.Take the expected total rental loss for the remaining period up to 30 June 2019 (incl QS deductions) and divide by 3. or if property is owned by more than 1 person then also divide by that number...eg Two people divide by 6. Thats a rough guide to the expected refund benefit.

    If the number is small then its less value and hardly worth the effort (or cost if you have assistance)

    The withholding variation merely brings forward the expected annual tax refund so lesser fortnightly tax is taken from pay. Its nothing additional.
     
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