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having income but income tax is 0.00

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Newbie

Views 1485

Replies 7

Hello,
I have registered as a sole trader and been working as a contractor for an Australian company since October 2017. I have also registered for quarterly tax payment. However, my income tax is zero although I have been paid for 3 months (5,000 AUD/month).
How could I pay tax?
Thanks

 

 

1 ACCEPTED SOLUTION

Accepted Solutions
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Best answer

Devotee

Replies 4

Hi @luongvantri,

 

Thanks for following up! As we're currently in quarter 2 for the 2017-18 year, the calculation will include a 'catch up' amount for quarter 1 to make sure that you've paid enough tax to cover the entire financial year.

 

You can choose to vary your quarter 2 payment up or down depending on your financial situation, but you must ensure you've paid enough tax to cover the entire year by the time you make your quarter 4 payment. Penalties may apply if you pay less than 85% of your actual liability by 28 June.

 

Hope that helps!

7 REPLIES 7
Highlighted

Devotee

Replies 6

Hi @luongvantri,

 

Thanks for getting in touch! Your post raises a couple of key points:

 

  • You mentioned that you're working as a contractor and that you've registered for quarterly tax payments. This information suggests that you have an ABN and registered for pay as you go income tax instalments (also known as PAYG ITI or PAYGI)
  • You also mentioned that you have been working as a contractor since October 2017 -  which indicates that you registered for your ABN and PAYGI around the same time.

If both of these assumptions are correct, then the following information may help answer your questions:

 

  • If you're a sole trader who is working as a contractor, then you are responsible for managing your income tax and super obligations. Employees have tax and super withheld for them by their employer; as you're not an employee, you'll need to set aside a certain amount of money each quarter to send to us to pay your tax in advance. This is known as PAYGI.
  • When you receive your first activity statement, you'll need to tell us how much money you expect to earn each quarter and calculate the amount of tax you'll need to pay - especially if you opted into the PAYGI system. We won't have any records of your prior year small business income to suggest how much tax you'll need to pay, so you'll need to report your expected income on your quarterly instalment activity statement (IAS).
  • We issue your IAS every quarter, with lodgment and payment due by February 28 (quarter 2), April 28 (quarter 3) and June 28 (quarter 4). If you have a myGov account, you'll find your IAS in your myGov inbox around 3-4 weeks before your lodgment due date. You can lodge and pay your statements online via myGov or by requesting a paper form.

We have a detailed guide to PAYGI on our website that explains how to calculate your anticipated income tax, as well as how to report your income and complete your IAS. We also offer a range of other useful resources to help you start and manage your new small business.

 

Hope that helps!

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Newbie

Replies 5

Hi AmandaE,

Thanks for your very detailed response. I have used "vary instalment" with a tax calculator to calculate the tax that I have to pay. With a payment of $ 5,000/month that I have received from the company since October 2017, it is estimated that my income is $ 45,000 for the financial year 2017-2018. As a result, I have to pay a total tax of $ 6,172. It has just been a quarter since October 2017, so I think I have to pay an up-to-date tax amount of $1,543. However, the system (of ATO) calculated that I have to pay $ 3,086 (= $1,543 x 2 quarters). I am wondering about this number. Is it counted for the period July 2017 - December 2017? 

Thanks

Highlighted

Best answer

Devotee

Replies 4

Hi @luongvantri,

 

Thanks for following up! As we're currently in quarter 2 for the 2017-18 year, the calculation will include a 'catch up' amount for quarter 1 to make sure that you've paid enough tax to cover the entire financial year.

 

You can choose to vary your quarter 2 payment up or down depending on your financial situation, but you must ensure you've paid enough tax to cover the entire year by the time you make your quarter 4 payment. Penalties may apply if you pay less than 85% of your actual liability by 28 June.

 

Hope that helps!

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Newbie

Replies 3

Hi AmandaE

Thanks alot

 

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Taxicorn

Replies 2

Remember that if you do pay too much it will be refunded to you when you lodge a 2018 tax return.

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Newbie

Replies 1

Hi AmandaE

It has been a week since I paid the tax, however, my payment has not been updated in the ATO website (they still require me to pay the tax).

Does it take long time for the update?

Thanks

 

 

 

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Community Support

Replies 0

Hi @luongvantri,

 

Thanks for getting in touch!

 

We can't guarantee it's safe to share personal information on an online forum so we can't access your account to check your account, however generally payments can take up to 3-4 business days to show in your account. Keep an eye on your myGov account, or, alternatively you can you can phone us on 13 28 61 between 8am - 6pm, Monday to Friday to speak with an operator check your account.

 

Thanks.