Very simply a PAYG Variation is where you get your tax refund weekly, fortnightly or monthly in your pay compared to a big tax refund at the end of the year.
The PAYG Variation is a forecast of what the expenses will be on the property for the next year. The variation is always done for the next year. This way you can receive your refund in your pay.
Your accountant fills out the variation on your behalf using careful estimates on what the expense for the property will be for that year.
The careful estimates need to be to justified as you may have an issue when you lodge your tax return. If you have overestimated your expenses you will be required to pay that amount back.
The PAYG variation does not replace a tax return. You will still need to lodge a tax return based on actual figures with source documents. This then acts as a reconciliation tool. Based on this you will get an extra refund or you will owe some money back to the ATO.
The main advantage of the PAYG Withholding Variation is the Cash Flow benefit that you will receive. Highly negatively geared investors can use the cash flow to put towards the repayments.
Now is the time we start to think about PAYG Withholding Variations, preparing and lodging. So if you own a rental property now would be a great time to give us a call and get your refund in your pay.
