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Re: PAYG: how to opt out because expected income will not attract tax.

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I receive a small income from a discretionary Trust.

My total income is normally below the tax threshold.

In 2016-17 however, the distribution to me from the Trust was higher than normal and I've been advised by ATO that I have to pay PAYG tax for 2017-18.

However, not only is the Trust income down in 2017-18 so far, but it is also expected that my 2017-18 income will be down as well, putting it below the tax threshold.

Please advise how do I get ATO to remove me from the PAYG system, noting that I couldn't find anything relevant on the ATO web site.

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ATO Certified

Devotee

Replies 6

Hi @DianeJNew

 

Welcome to the ATO online community

 

You can vary your instalment amount if you believe using the amount or rate notified by us will result in you paying too much or too little tax for the year. To do this, you need to be able to reliably estimate the tax on your business and/or investment income for the current financial year.

If you vary your instalment, it's important that you don't underestimate the amount or rate. If your instalments are more than 15% under the actual tax payable at the end of the year, you may be subject to the general interest charge on the difference. You may ask us to reduce or waive the interest by writing to us about the circumstances that led you to underestimate your instalment rate or amount.

Our PAYG instalment calculator will help you work out your instalments if you decide to vary the amount.

To vary the instalment amount you will need to vary the PAYGI activity statement, If you have a MyGov account linked to the ATO you are able to vary it online or alternatively you will need to send the activity statement to us with the correct labels completed, https://www.ato.gov.au/General/PAYG-instalments/How-to-vary-the-amount-you-pay/

 

In regards to exiting from the system please see, https://www.ato.gov.au/General/PAYG-instalments/Exiting-PAYG-instalments/, you can contact us to discuss being  exited from the system by calling 13 28 66, between 8.00am and 6.00pm, Monday to Friday

Eligible individuals (including sole traders) with a myGov account linked to the ATO can exit the PAYG instalments system online.

 

 

Regards, Tracey

 

 

 

Please note this is my personal view; I’m an ATO employee who chooses to help out here in my own time
9 REPLIES 9

Best answer

ATO Certified

Devotee

Replies 6

Hi @DianeJNew

 

Welcome to the ATO online community

 

You can vary your instalment amount if you believe using the amount or rate notified by us will result in you paying too much or too little tax for the year. To do this, you need to be able to reliably estimate the tax on your business and/or investment income for the current financial year.

If you vary your instalment, it's important that you don't underestimate the amount or rate. If your instalments are more than 15% under the actual tax payable at the end of the year, you may be subject to the general interest charge on the difference. You may ask us to reduce or waive the interest by writing to us about the circumstances that led you to underestimate your instalment rate or amount.

Our PAYG instalment calculator will help you work out your instalments if you decide to vary the amount.

To vary the instalment amount you will need to vary the PAYGI activity statement, If you have a MyGov account linked to the ATO you are able to vary it online or alternatively you will need to send the activity statement to us with the correct labels completed, https://www.ato.gov.au/General/PAYG-instalments/How-to-vary-the-amount-you-pay/

 

In regards to exiting from the system please see, https://www.ato.gov.au/General/PAYG-instalments/Exiting-PAYG-instalments/, you can contact us to discuss being  exited from the system by calling 13 28 66, between 8.00am and 6.00pm, Monday to Friday

Eligible individuals (including sole traders) with a myGov account linked to the ATO can exit the PAYG instalments system online.

 

 

Regards, Tracey

 

 

 

Please note this is my personal view; I’m an ATO employee who chooses to help out here in my own time

Newbie

Replies 5

Hi Tracey,

I was pleased to see that I should be able to do what I want on line. But I still can't figure out how to do it online because when I log in via my gov and follow your guide it says:

"To pay or vary your installments go to instalments" (a link) that take you to where you already are and insists that you select an option "vary how often you pay" but there is nothing to allow variation of AMMOUNT to be paid - which needs to be reduced to zero since my reliable estimate is that I will not have to pay tax in 2017-18. 

So I still can't figure ourt how to set my PAYG liability to $0 on line?

Please advise how I can do this.

 

Other problems noted where the sytem contradicts itself and gives misleading info that could con me into paying my tax liability too early:

Here's the contradiction: As expected, one page told me I had

$0 overdue, $xxx.xx Not yet due, $xx.xx balance, but when I clicked the View Account details on that page, the new screen reported that I had:

$xx.xx overdue, $0 Not yet due, and $xx.xx balance.

Neither statement gave a due date:

 

Another ATO Community bug is that it asked if I was willing to give feedback at the end of my session, but when I agreed, it immediately started the questions before I'd done anything.

 

Devotee

Replies 4

Thanks for replying @DianeJNew

 

The following steps will hopefully make things eaiser for you.

 

Select - TAX tab, Activity statements - Lodge activity statement

Select  -  Not lodged, July 2018 - September 2018, Click on the lodge button

Select - Vary Instalment

Labels T8 - Enter 0.00, T4, Reason for variation, T9 Enter 0.00 (if applicable- these amounts are only if you need to vary to 0.00)

If you are able to see a  5B label, You can get a credit back for the previous period within the same financial year by adding the total instalement from the last quarter. If you are not able to see the 5B label, Please call 13 2866 , this is an area that can assist you to lodge the activity statement for  via phone, please be aware that we will ask you privacy questions before we can access your account.

 

All going well, click on declaration - Submit

 

Once this has been done, follow the below steps

Select, TAX
Select, Income Tax - Accounts

Select an account to view transactions details, Activity Statement ( blue hyper link), then filter by dates and change the date parameters which gives you a better overview.

 

In regards to the issue with the Community Feedback  I am unable to answer that one for you - Sorry @JodieH or @AmandaE may know :-)

 

 

 

 

 

 

 

Please note this is my personal view; I’m an ATO employee who chooses to help out here in my own time

Newbie

Replies 0

Thanks Tracey,

I think that worked as at least it now shows no PAYG due.

I couldn't see B5 and it does not apply to me as I'm retired and have not paid PAYG for many years.

 

But some comments that need to be passed on to the ATO on-line system designers and form-layout designers:

 

1. System Problems: T4 Reason for variation insists on a reason but all the reasons available are irrelevant to my case. The closest is "Change in Trading Conditions" but that may or may not be true because the Discretioonary Trust of which I am a beneficiary decides each year what benefit I will receive and could decide to pay me whatever it wishes regardless of changes in "Trading Conditions" which is not exactly relevant for a Trust which earns most of its income from property rental as owner, plus a small share portfolio. I suggest an "Other": option would allow a more correct reason as: "I have been advised that my 2017-18 income will be below the tax threshold."

 

2. System problem & problem with design/info presentation of Statement of Account Forms.

When I first enquired on line, the ATO system reported confusing info on two pages that linked to each other: One page said that my tax was "not yet due", the linked page said the same tax was "Overdue" but neither page gave a due date. I have screen shots of the contradictory info. But today they both say "Overdue" but neither give the due date. Eventually, afetr reading my tax assessments SEVERAL times looking for any hint of due date I eventually found this:

"Explanation of terms ... The effective date is the date we use for the calculation of general interest charge and other penalties or interest. It is also the due date of any liabilities."

Then I had to search to find "Effective Dates" inconspicuos in coulumn two of tables, most of which apply to a $0.00 amount. But finally, in the second table on Page 3 it finally has four rows with non-zero amounts, but with three different Effective Dates", the last of which is the actual date of Issue. In other words the Satetement contradicts itself in saying that the amount is 'not due yet' when the inconspicuous print implies that it was and is due and payable immeditaley. I suggest that the current ATO  Statement of Account should have a clear statement of due date: i.e. instead of "Amounts not yet due", as the most prominent item, it should be labelled Amount due on Due dd/mmm/yyyy. As it is, I find that I'm now almost a month overdue. :-((

 

Thanks again.

Community Support

Replies 2

Hi @DianeJNew,

 

Thanks for joining our Community!

 

@Tracey74 has provided some great information for you. In regards to the ATO Community feedback survey, thanks for letting us know. We'll pass this information on and get it fixed as soon as we can.

 

Thanks.

Newbie

Replies 1

I logged back in wanting to sign off as problem solved, because it is - sort of, in that the system now shows no PAYG payments due and the original problem is solved. Thankyou Tracy74.

However, Jodie H, the ATO system has even more problems than I flagged before re due dates.

First, as a result of the PAYG issue, I noticed that I was overdue on 2016-17 tax due and paid that by BPay on 9th December.

Then I noticed that I'd missed an ATO SMS text message dated 06/12/2017 that said my 2017 income tax bill was overdue and that: "it was due on 1 December 2017". So the ATO system said it was due in mid November, but the text message says it was due in December! The system is a tad confused and it certainly has confused me, because, with the lack of a clear 2017 date I had wrongly assumed that my 2016-17 tax was not due until the 2018 PAYG date.

Hopefully ATO can sort out such bugs and give taxpayers clear advice on all notices of exactly when payments are due rather than 'hiding' the due date in column-2 in table-2 on page-3 (as in my case) - and then contradict that date with a different date in a Text message (as in my case).

So please pass this on to the IT system designers.

 

Meanwhile I'm still not sure I'm out of trouble because although I actually paid my overdue 2017 tax bill by BPay on 9th December 2017, the ATO online system, just minutes ago insisted in bold red that I was OVERDUE! So when it shows correctly, I can come back and sign-off as problem solved.

Devotee

Replies 0

HI @DianeJNew

 

When you make a Bpay payment it takes 2 business days for the payment to appear on the account, if you check it tomorrow it should be showing as balance $0.00.

Please note this is my personal view; I’m an ATO employee who chooses to help out here in my own time
Highlighted

Newbie

Replies 1

The reason behind this change is so the ATO can realise millions of extra dollars in interest from ‘prematurely’ accrued revenues (at your expense).

 

- If you don't pay the instalments the ATO will penalise you with a fine [1]

- Earning ~$8880 (top marginal rate) outside of PAYE earnings means you cannot escape the system. [2]

- Once you are in the system, you can't opt out. While you are able to 'reduce' your installments (by predicting lower revenues) - if you underestimate you will be fined for perceived ‘evasion’ so why take that risk.

 

[1] https://www.electrafrost.com.au/making-sense-of-payg-instalments-for-the-uninitiated/

[2] https://www.ato.gov.au/General/PAYG-instalments/

Moderator

Replies 0

HI @rodneydanger,

 

As advised in previous comments on this thread if your circumstances change you are able to stop PAYG instalements.

 

Thanks

 

KylieS

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