Tax Tips

Tax tips

Varying your PAYG instalments

You can vary your PAYG instalments throughout the year if you think you will pay too much tax, compared with your estimated tax for the year.

To assist businesses affected by the COVID-19 pandemic, the ATO won’t apply penalties or interest for the 2020–21 income year for excessive variations when you make your best attempt to estimate your end of year tax. However, general interest charges may apply to outstanding PAYG instalment balances.

Variations don’t carry over into the new income year, so if you made variations in the 2019–20 income year, you may need to vary again in 2020–21. Your varied amount or rate will apply for all your remaining instalments for the income year, or until you make another variation.

Calculating and paying the right PAYG instalment amounts will help you manage your cashflow.

Tip! Talk to your tax adviser at Southern Business Solutions if you want to vary your PAYG instalments.

Closing a small business

Unfortunately, some businesses may need to close their doors – either temporarily or permanently – due to the COVID-19 pandemic. The ATO has called on such businesses that are closing temporarily to “do their best to keep up with tax and superannuation obligations”.

If you are in this situation and you need additional time or support, you should contact your registered tax professional or the ATO on 1800 806 218.

If a business is forced to close permanently as a result of the COVID-19 pandemic, or for any other reason, it must still lodge any outstanding activity statements and instalment notices, make GST adjustments on the final activity statement and lodge final tax returns. This will enable the ATO to finalise the taxpayer’s account and issue any refunds that might be owed.

Once the entity’s tax affairs are finalised, the ABN and GST registration should also be cancelled. Business records must be kept for at least 5 years after the end of the financial year in which a business is sold or closed.

Ref: TaxWise Business November 2020

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