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Re: Why are my PAYG instalment amounts fluctuating from Q to Quarter?

Newbie

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Re.: PAYG Instalments: My estimated tax is $2975 based on my 2019 - 2020 income tax return.

July - Sept 2020 I paid $1275,

Oct - Dec 2020 I paid $212 (twohundredandtwelve),

Jan - Mar 2021 the ATO is asking for $743!

Why this fluctuation? 

What might be the amount for the Apr - June 2021 Quarter?? 

Do I understand this right that the ATO breaks up the $2975 over 4 Quarters? 

I too have a monthly Budget, and sudden higher payments are dificult to deal with. 

Any explanation? 

Thank you 

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Devotee

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The short answer is that you next instalment should be for $743, give or take a dollar or two.

 

It looks like the $1,275 was calculated before your 2020 return was processed and has been based on tax payable on your 2019 assessment.  As the second instalment was calculated after the 2020 return was processed, the amount due for each quarter was recalculated to be 25% of your 2020 liability i.e. $743 (rounded).  This meant that the first quarter payment was $532 higher than it would be if it was based on the 2020 liability.  This excess was deducted from the second instalment, reducing it to $212.   The third and fourth instalment will then be $743, unless the final amount is rounded to $744 or similar.

 

 

2 REPLIES 2

Most helpful response

Devotee

Replies 1

The short answer is that you next instalment should be for $743, give or take a dollar or two.

 

It looks like the $1,275 was calculated before your 2020 return was processed and has been based on tax payable on your 2019 assessment.  As the second instalment was calculated after the 2020 return was processed, the amount due for each quarter was recalculated to be 25% of your 2020 liability i.e. $743 (rounded).  This meant that the first quarter payment was $532 higher than it would be if it was based on the 2020 liability.  This excess was deducted from the second instalment, reducing it to $212.   The third and fourth instalment will then be $743, unless the final amount is rounded to $744 or similar.

 

 

Newbie

Replies 0

Thank you Glenn 4802, makes all sense now,especially since the Instalments have something to do with Interest earnings on which I pay Tax and hence the quarterly Instalments. But also the drop in Interest earned due to the RBA cutting the official Interest Rates across the quarters. 

But I also like to note that the ATO should be aware of the plunge of the RBA Rates and earnings and adjust PAYG Instalments accordingly, i.e. southwards, because by now the earnings equal nearly the total PAYG amount.

In previous years, the PAYG Instalments were almost equal each quarter. 

Thank you again for your view