Downwards variations
Examples:
Sue is a salary and wage earner who uses her own vehicle for work purposes. Her payer pays her an annual motor vehicle allowance of $10,000. Sue estimates that her annual tax deductible car expenses will be $9,000. She can apply for a variation so that her payer will withhold tax from only $1,000 of her allowance.
John is a real estate salesperson who is paid on a commission basis. He owns a rental property. John’s annual gross income from his only payer is $45,000. He estimates that his rental property loss will be $15,000. Therefore, his estimated taxable income will be $30,000 ($45,000 – $15,000). John can apply for a variation to have his withholding rate calculated based on his estimated taxable income of $30,000.
Allan is a 19-year-old student who works part time for two payers. The average number of hours Allan works is 20 hours a week. He is paying a higher rate of tax on his second job because he could not claim the tax-free threshold on the tax file number declaration he lodged with this payer. Allan can estimate the total income he is likely to receive for the financial year with a reasonable degree of accuracy. He can apply for a variation to have his withholding rate averaged for both payers.
How to apply for a downwards variation
If you want to vary your withholding amount downwards, you need to lodge a PAYG withholding variation application form with the Tax Office. Applications must be lodged using the correct version of the Tax Office approved form. We issue a new version of the form each financial year, which is usually available from early May. Old versions of the form will not be accepted.
You can lodge your application on a paper form or electronically over the internet. Applications lodged electronically may be processed faster than paper forms.
You can access the electronic e-variation form on our website at PAYG withholding variation application (E-variation).
If you have difficulty downloading, completing or transmitting the electronic application, phone 1300 360 221 for assistance.
You can download a paper application form at PAYG withholding variation application 2010 (NAT 2036), or phone 1300 360 221 and ask us to send you a copy.
Send your paper application to:
If you send your application to a Tax Office address other than the one above, processing of your application may be delayed.
Processing your application
We will process your application only if:
- we can identify your tax file number
- you have lodged all required tax returns or notified us in writing if you were not required to lodge tax returns in prior years
- you do not have any outstanding tax debt owing to the Australian Government
- you do not have any outstanding debts under any other Acts administered by the Commissioner of Taxation
- you did not receive a debit assessment on your last tax assessment (if you also had an approved withholding variation for that year)
- the application provides all the requested information and all attachments.
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.
We may seek more information from you before or after your application is processed. If you fail to provide more information as requested, your application may not be approved.
If you need help to complete the application, phone us on 1300 360 221.
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False or misleading information could result in prosecution and penalties.
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How long will I have to wait for my variation to be processed?
If you lodged an e-variation you should anticipate a 28 day processing time.
If you lodged a paper application you should anticipate a 56 day processing time.
We will endeavour to process all applications as quickly as possible which may be earlier than indicated.
When your e-variation is received, we will send you a message containing your trace identity number. If you do not receive this message within three days of sending your application, phone 1300 360 221 for help.
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Processing of your application will be delayed if we need additional information.
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Starting date
If your application is approved, the varied rate or amount of withholding will start from the next available payday after your pay office receives the notice of withholding variation from us. The letter we send to you is not the official notice. Your pay officer cannot implement a variation using your letter.
If you lodge your application before the beginning of the financial year, your varied rate should take effect from 1 July in the following financial year.
The implementation of your variation may be delayed if you do not provide a correct Australian business number (ABN) and your pay office’s direct postal address (for example, if you give us your work location rather than the pay office postal address).
Finishing date
Your variation finishes on the expiry date shown on the notice of withholding variation from us. Most variations finish on 30 June each financial year. However, some variations are issued with an expiry date other than 30 June. It is your responsibility to re-apply for a variation if your circumstances require it.
Multi-year variations
Variations for car, parking, phone and computer allowances may now be issued for more than one year. The expiry date on the notice of withholding variation we send you after we process your application will show whether your variation has been issued for more than one year.
Re-applying for the next financial year
If you require a downwards variation to be in place before the first pay of the next financial year, we recommend you lodge a new application by no later than the middle of May each year. The earliest an application for the next financial year can be lodged is 1 May.
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Make sure you use the correct version of the form, as it changes each year.
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Change of circumstances
You must complete a new application and advise us of any change in your circumstances during the year – for example, when you sell a rental property or your taxable income changes to the extent that you will receive a debit assessment of $500 or more.
Last Modified: Friday, 7 August 2009
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