When you have a substantial tax payable amount during a tax year, in order to pre-empt your tax payable the following year, the ATO places you in the PAYG Instalment system.  This means that you pay an amount to the ATO each quarter, to ensure that you have a smaller payable amount at the end of the financial year.  The ATO does this to ‘assist’ you throughout the tax year so that you can ‘prepay’ your tax.

Unfortunately, once you are in the PAYG Instalment system, you are unable to simply ‘opt out’.  Rather, you have to lodge a tax return with a refund amount.  If you believe that this will be the case, you do have the option to vary the instalments to NIL once you receive the notice.  However, if you vary the amounts to NIL and end up with a tax payable, the ATO can impose penalties.

We recommend that you pay the instalment amounts when they become due, as per statements which will be sent to you by the ATO.  These amounts will then be entered into your tax return in order to reduce any tax payable.  Any overpayment will result in a refund.


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