• Income

    When you are estimating your income, include all your estimated gross income, such as:

    • salary, wages or allowances
    • payments made under a labour hire arrangement
    • payments subject to voluntary withholding agreements
    • personal services income attributed to you
    • income from a business (not subject to voluntary agreements)
    • Australian government allowances
    • Australian government pensions
    • assessable foreign income including pensions and annuities
    • interest
    • dividends
    • imputation credits
    • partnership distributions
    • trust distributions
    • other assessable income.

    Do not include:

    • net capital gains (these are not included as they are generally one off payments that you will not receive in the next income year)
    • exempt income such as the family tax benefit or child care benefit payments.

    Allowable deductions

    When you are estimating your allowable deductions, include your estimate of your allowable deductions, such as:

    • work related expenses
    • business expenses
    • interest and dividend deductions
    • gifts or donations
    • the deductible amount of an undeducted purchase price of an Australian pension or annuity
    • the cost of managing tax affairs
    • tax losses of earlier income years
    • other allowable deductions.

    Tax on estimated taxable income

    Apply the current tax rate to your estimated taxable income. Remember to include the Temporary Budget Repair levy, if applicable, in your calculation.

    If you are a resident of Australia, these tax rates apply for the current income year.

    See also:

    Tax offsets (other than refundable tax offsets)

    When you are estimating your tax offsets, do not include refundable tax offsets. Tax offsets may include:

    • super contributions, annuity and pension (except contributions made on behalf of your spouse)
    • zone or overseas forces
    • seniors and pensioners tax offset
    • Invalid and invalid carer tax offset beneficiary tax offset
    • net medical expenses tax offset
    • eligible termination payment tax offset
    • life assurance bonus tax offset
    • other tax offsets.

    Tax offsets are not deductions. You take deductions from your income to work out your taxable income. The tax on your taxable income is then reduced by your tax offsets.

    Some tax offsets are refundable. Do not include refundable tax offsets here as there is a section for them later in the worksheet. For more information, see ‘Refundable tax offsets’.

    If your tax offsets are greater than the tax on your assessed taxable income, you can generally only use them to reduce the amount of tax on your taxable income to zero.

    Tax offsets generally (with the exception of the foreign income tax offset) do not reduce your liability to pay the Medicare levy. We work out the Medicare levy on your estimated taxable income. Do not include foreign income tax offset here as there is a section for it later in the worksheet.

    Do not include the following in the tax estimate worksheet:

    • mature age workers tax offset
    • franking deficit tax offset
    • offset for Medicare levy surcharge (lump sum payment in arrears)
    • the super tax offset for contributions made on behalf of your spouse

    These tax offsets will not reduce your estimated tax on business and/or investment income. They are only taken into account when we assess your tax return. You should not vary the amount of your PAYG instalment for these tax offsets.

    You will not be able to work out your foreign income tax offset if you estimate either a capital gain or exempt foreign employment income. If you expect to receive any of these, phone us for more information.

    See also:

    Net tax payable before applying foreign income tax offset and Medicare levy

    Your estimated net tax payable will be your tax on estimated taxable income minus your estimated tax offsets.

    If this is a negative amount, your estimated net tax payable will be nil. Write '0' in this box. This is because your tax offsets (other than foreign income tax offset and refundable tax offsets) cannot reduce your Medicare levy or compulsory HELP or Financial Supplement repayments.

    If you are entitled to claim an amount of foreign income tax offset, you can use that offset to reduce any net tax payable remaining after applying all your other non-refundable tax offsets, and also reduce your liability to pay the Medicare levy.

    Medicare levy

    Your estimated Medicare levy can be worked out by multiplying your estimated taxable income by 2%.

    Do not include extra amounts payable under the Medicare levy surcharge.

    You may be exempt from paying the Medicare levy or be eligible to pay a reduced amount of Medicare levy. Phone us if you think you may be exempt or eligible to pay a reduced amount.

    Temporary Budget Repair levy

    From 1 July 2014 the Australian government has introduced the Temporary Budget Repair Levy. This imposes a 2% levy on individuals and taxable trusts whose income is greater than $180,000 until 30 June 2017. When varying your instalments you will need to include tax payable due to the Temporary Budget Repair Levy.

    Net tax payable after applying Medicare levy and foreign income tax offset

    This is your estimated net tax payable after applying all your non-refundable tax offsets and the Medicare levy.

    If this is a negative amount, your estimated net tax payable will be nil. Write '0' in this box

    Compulsory HELP, Financial Supplement and Trade Support Loan repayment

    This item applies to you if you have to repay amounts under the Higher Education Loan Program (HELP), Student Financial Supplement Scheme (SFSS) or Trade Support Loan (TSL).

    Your estimated tax may include an amount for you to pay toward your HELP, SFSS and TSL liability if your estimated repayment income is above the minimum repayment threshold.

    Repayment income is calculated using the following amounts from your tax return:

    • taxable income
    • reportable fringe benefits amounts (as reported on the payment summary)
    • total net investment loss (which includes net rental losses)
    • reportable super contributions
    • any exempt foreign employment income amounts.

    We will only calculate one compulsory repayment for HELP, SFSS and TSL (if applicable) in this assessment based on your accumulated debt at the time we make the assessment.

    You will not have to make a compulsory repayment for HELP, SFSS or TSL if you have a spouse or dependants and if, due to low family income, you either:

    • are entitled to a reduction of your Medicare levy
    • do not have to pay the Medicare levy.

    To calculate your estimated compulsory repayment, refer to HELP repayment thresholds and rates, Financial Supplement repayment thresholds and rates or Trade Support Loan thresholds and rates.

    Refundable tax offset

    Where you have refundable tax offsets available, you can apply these to reduce your tax, including your Medicare levy.

    Refundable tax offsets include the franking credit tax offset (the equivalent of the imputation credits that you estimate you will receive for the financial year).

    These tax offsets can be applied against your Medicare levy, HELP or Financial Supplement debt liabilities and any excess will be refunded to you after we have assessed your return.

    Do not include the private health insurance rebate tax offset. You cannot reduce your estimated tax on business and/or investment income with this tax offset. We only take it into account when we assess your tax return. You should not vary the amount of your PAYG instalment for this offset.

    Estimated tax credits

    These items include amounts that you estimate will be withheld from payments made to you such as:

    • salary or wages
    • payments subject to voluntary agreements
    • payments made under a labour hire arrangement
    • personal services income attributed to you
    • investments where you have not supplied a TFN
    • sales or services you have provided where you have not quoted an ABN.

    Tax on business and/or investment income

    If this amount is a negative figure, your estimated tax is nil.

    More information

    If you need more information about PAYG instalments:

    • visit our website at ato.gov.au/paygi
    • phone us on 13 28 61
    • write to:
       
      PO Box 1032
      Albury NSW 2640

    For more information about the business portal and lodging your activity statement online, visit our website at ato.gov.au/onlineservices

    For more information about claiming a family tax benefit (FTB) entitlement:

      Last modified: 11 Aug 2016QC 16159