I receive income from investments (property and bank interest) and my PTY LTD company, so I have been put on an activity statement program. I have two questions:
1; am I now paying instalments on my forecasted tax for the next tax year? Where is this money going - Is it being held in a trust where it earns interest?
2; can I reduce these payments somehow, as I think they are way over what my actual tax bill will be?
Hi @TimPP,
Yep, that's correct! You're paying your tax in advance to avoid a tax debt when you lodge your tax return next financial year. When you're entered into the instalment system the amount or rate is calculated and based off your last lodged tax return.
No, it's not held in trust and doesn't earn interest. It's no different to an employer withholding tax on your behalf. Instead, this way you're doing it yourself. It will however be credited when you lodge your tax return and minimise the amount of tax you owe on your next lodgment.
Yep, you can vary your instalment amounts if you don't think you'll earn as much this financial year.
Check out our article about PAYG instalments for more info.
Hi @TimPP,
Yep, that's correct! You're paying your tax in advance to avoid a tax debt when you lodge your tax return next financial year. When you're entered into the instalment system the amount or rate is calculated and based off your last lodged tax return.
No, it's not held in trust and doesn't earn interest. It's no different to an employer withholding tax on your behalf. Instead, this way you're doing it yourself. It will however be credited when you lodge your tax return and minimise the amount of tax you owe on your next lodgment.
Yep, you can vary your instalment amounts if you don't think you'll earn as much this financial year.
Check out our article about PAYG instalments for more info.
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