• Downward variations

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    This application form should be used when your payee wants to decrease (downward variation) their pay as you go (PAYG) tax withheld from payments made to them. You need approval from us to decrease the amount you withhold from a payment such as wages. We may grant a downward variation to meet the special circumstances of a particular case or a class of cases.

    Individual variations

    If your payee wants to decrease their withholding tax amount, they need to lodge a PAYG withholding variation application with us.

    Attention

    We issue a new version of the form each financial year – payees must make sure they use the correct version.

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    Get it done

    You can lodge a variation application online using an e-variation. For more information and to use the online application, refer to PAYG withholding variation application (e-variation).

    End of get it done

    If the payee is unable to lodge online, they will need to order a paper application by:

    • phoning our automated self-help ordering service on 13 28 65
    • visiting Online ordering and searching for 'withholding variation'
    • phoning 1300 360 221 and ask us to send them one.

    Your payee needs to complete the form and return it to us. The address is on the form.

    When we grant approval for a downward variation, we will send an approval letter to the payee and a variation notice to you. Both the notice and the letter will clearly specify the expiry date of the notice.

    To continue to have decreased tax withheld from payments after the expiry date, the payee must lodge another PAYG withholding variation application – at least six weeks before the expiry date.

    Attention

    Business tip

    Salary sacrifice amounts are not subject to the varied tax rate.

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    Class variations

    In some cases, a group of your payees may want an identical variation. In these circumstances, you may apply for a class variation on behalf of all the relevant payees – for example, due to expected deductible expenditure from an allowance, your payees' withholding may be too high.

    In making a request for a class variation, you are making a declaration on behalf of your payees. The declaration states that the expenditure to which the allowance relates can reasonably be expected to be deductible on assessment. You should ensure you are able to make this declaration correctly on behalf of all payees included in the request.

    You may apply for a class variation if all of the following apply:

    • the allowance can be reasonably expected to be expended for the intended purpose
    • the payees can be reasonably expected to incur expenditure of an amount at least equal to the amount of allowance paid
    • the expenditure the allowance relates to can reasonably be expected to be deductible on assessment
    • it is for six or more employees.
    Attention

    If there are fewer than six payees or payees for whom you are unable to make this declaration, each payee can apply for the variation on their own behalf using the PAYG withholding variation application (e-variation).

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    If you have any questions about your payees' circumstances, or want to apply for a class variation, phone us on 1300 360 221 between 8.00am and 6.00pm, Monday to Friday.

    What to do when you receive a variation notice

    If you receive a variation notice from us, you need to do all of the following:

    • ensure the variation notice is correctly addressed to you, the payer
    • ensure that the notice correctly identifies the payee
    • apply the varied rate of tax from the effective start date that appears on the notice
    • ensure that you apply the varied rate of tax to the correct payment type that appears on the variation notice
    • stop applying the variation after the expiry date on the notice, unless you receive a renewal.
    Attention

    Business tip

    Refer to the example

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    Withdrawal of a variation notice

    A variation notice can only be withdrawn by us. If your payee wants their variation notice withdrawn before the expiry date, tell them to write to us at the address on their approval letter.

    If you receive a withdrawal of variation notice from us, you must do all of the following:

    • ensure the withdrawal notice is correctly addressed to you, the payer
    • ensure that the withdrawal notice correctly identifies your payee
    • stop applying the varied rate of tax from the date of effect on the withdrawal notice
    • revert to withholding in accordance with the relevant tax tables from that date.
      Last modified: 11 Mar 2015QC 17597