A taxpayer’s instalment rate or amount is calculated by the Tax Office based on the most recently lodged income tax return.
Common causes for high instalment rate or amount include:
- The taxpayer received employee share scheme income;
- The taxpayer reported HECS/HELP debt in their last income tax return;
- Income was disclosed at a wrong label in the income tax return;
- The return is amended to include excess superannuation contributions
PAYG instalments can be varied if:
- The taxpayer, or their tax agent, believes the instalment rate or amount is too high; or
- The taxpayer’s financial circumstances have changed
Caution must be taken when varying instalments. If the varied amount or rate turns out to be less than 85% of what it should be, taxpayers may be liable to pay a variation penalty.
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