We will process your application only if you:
- have lodged all required tax returns and activity statements, or notified us in writing if you were not required to lodge tax returns in prior years
- did not receive a debit assessment on your last tax assessment (if you also had an approved withholding variation for that year)
- do not have any outstanding tax debt owing to the Australian Government
- do not have any outstanding debts under any other Acts administered by us.
We may seek more information from you before or after your application is processed; if you fail to provide this, your application may not be approved.
If you are granted a variation, this does not mean we have accepted the tax treatment of the income and deductions on your application. Your actual tax liability will be determined after you lodge your tax return.
You must keep records of your income and expenses in accordance with the requirements of the ITAA 1936 and the ITAA 1997.
We process your application based on the information you provide. It is your responsibility to make sure this information is adequate to allow us to calculate a withholding rate to meet your end-of-year tax liability.
If your application is not approved, you can apply for a review of the decision. You must apply in writing, explain why the decision should be overturned and include information to support your claims
Aggressive tax planning
In the past, promoters of managed investment schemes, and tax- effective investment products or arrangements, have encouraged participants in such arrangements to apply for income tax withholding variations to produce immediate tax savings. Promoters often imply that the granting of such variations supports the tax deductibility of the investment and indicates that our acceptance of the arrangement as complying with the relevant income tax laws. If you want more certainty about the tax treatment of an arrangement, ask the promoter if they have a product ruling from us. If the answer is:
- yes, ask for a copy and read it, or have an independent tax professional read it and explain how it applies to you
- no, ask why they don't have a product ruling for the project and apply to us for a private binding ruling or consult a tax professional who is not involved in promoting the investment.
If you have concerns about a promoter or a tax scheme, phone our hotline anonymously on 1800 177 006.
Non-commercial losses
If you have a net loss from a business activity you carry on as an individual, either as a sole trader or in partnership, the non-commercial loss rules will apply.
These rules determine if you can use your business loss to offset income from other sources. You can only offset your loss against assessable income from other sources if one or more of the following applies:
- one of the exceptions for primary production or professional arts businesses apply
- you meet the income requirement, and one of the four tests is satisfied - profits test, assessable income test, other assets test, real property test
- the Commissioner has exercised his discretion to allow you to claim the loss.
If you do not satisfy the above criteria, you must defer the loss to a future year when both of the following apply:
- there is a profit from the business activity or a similar activity
- you meet the income requirement and satisfy one of the tests.
Sections within Instructions
Last Modified: Wednesday, 1 May 2013