Hi everyone,
im thinking of filling out the tax variation form myself but i keep hearing people say that if i get it wrong i will have to pay a penalty. what is this penalty? at the end of the financial year, if wrong, dont i just have to pay the ATO back and thats it? r there any other penalties on top of that?
Thanks
PropertySeekerHello PropertySeeker,
I can't find a reference on the ATO website for what the actual penalty might be. There are two references in the PAYG Withholding Guide that might point you in the right direction:"Your application will be processed based on the information you provide. It is your responsibility to ensure that this information is adequate to enable your withholding rate to meet your end of year tax liability. "
"False or misleading information could result in prosecution and penalties."
So, nothing definite, just the threat of a big stick!
Craig.
Maybe this
http://law.ato.gov.au/atolaw/view.htm?DocID=RMP%2FRP0095ATO Receivables Policy
PART G. Penalties and Interest Relating to Receivables Activities
Chapter 95 VARIATION AND UNDERESTIMATION PENALTIES
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
PropertySeeker
I think, the main thing is to be honest and underestimate slightly to cover any unforseen income or rates drop. The Taxman is really only interested in people who are trying to cheat the system.
Variations are not an exact science, and as such you should be fine as long as you are using accurate information and estimations. I believe the penalties will relate to deliberate manipulation of the figures for your benefit.
As long as you are within a reasonable range of accuracy, and you square the figures up at the end of the year, you should be able to avoid the big stick.
Have a great day.
Tim
I haven't seen a specific amount or percentage that could apply if you overestimate your deductions.
But I have seen on the variation form that if you lodge a variation and you end up with a tax liability (as opposed to a tax refund), the ATO reserves the right to NOT allow you to lodge a variation form for the following tax year. So they can penalise not in terms of fines/fees but by denying you the cashflow benefit of "varying" in future years.
So the morale of the story is be conservative with your estimates and leave a buffer zone to be extra careful. Try avoid estimating so much to the point you run the risk of ending up with a tax liability.
So if you became unemployed and your figures changed does that mean you wouldn't be penalised?
Mills,
I believe that becoming unemployed would not be something you would be planning for. It would not change the variation too much though, as your main PAYG income is what the variation is applied to ie no salaye, then what are you varying? You would not be paying tax. If you resume your employment and your annual income drops as a result of the jobless period, I suppose (important to remember this is all just opinion) you should scrape through without too much drama.
PropertySeeker,
I've been running a variation for 6 years. Twice I had windfalls on the ASX and housing market which blew my estimates considerably.
I rang the ATO they gave me a BPAY number and I topped my account up on the 29th June. If you are honest and contact them if you are not sure you will have NIL issues. If unsure top your account and you will get it back any difference when you do your tax.
I love my variation
I also check my figures every quarter so I don't have any nasty surprises.Cheers
pwinne wrote:PropertySeeker,I've been running a variation for 6 years. Twice I had windfalls on the ASX and housing market which blew my estimates considerably.
I rang the ATO they gave me a BPAY number and I topped my account up on the 29th June. If you are honest and contact them if you are not sure you will have NIL issues. If unsure top your account and you will get it back any difference when you do your tax.
I love my variation
I also check my figures every quarter so I don't have any nasty surprises.Cheers
I should add you can update the variation anytime, every month if you so desire.
so if things change, update or END the variation.
Cheers
I also check my figures every quarter so I don't have any nasty surprises.You must be logged in to reply to this topic. If you don't have an account, you can register here.
