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  • PAYG withholding variation supplement

    Complete the PAYG withholding variation supplement (NAT 5423) to the PAYG withholding variation application (NAT 2036) if you either:

    • have business income and you are a sole trader
    • you have non-commercial business or partnership losses.

    This supplement is valid for one financial year.

    Don't complete this supplement if the income or loss you included in E7 of NAT 2036 is only derived from an investment in a managed investment scheme and you have a product ruling or a private binding ruling for that investment. Include income from this source in Section E of NAT 2036 and deductions in Section F of NAT 2036.

    Find out about:

    How to lodge

    We have made changes to the way you lodge online.

    To lodge online for individuals, go to myGov and select:

    • ATO
    • Tax
    • Manage
    • PAYG withholding variation.

    To lodge online for tax agents, go to Online services for tax agents and select:

    • Lodgments
    • Client forms
    • PAYG withholding variation.

    If you cannot lodge online, you can:

    • download the application or order a PDF at online orderingExternal Link – search for NAT 5423
    • phone us on 1300 360 221 between 8.00am and 6.00pm, Monday to Friday
    • phone us on 13 72 86 – Fast Key code 1 2 3 if you are a tax agent.

    Note: A printed version of PAYG withholding variation application supplement (NAT 5423) is no longer available. It is only available to download or order as a PDF.

    See also:

    Section G: Business details

    Only complete this section if you are a sole trader. Do not include details from businesses which are partnerships, trusts or companies.

    G1 Australian business number (ABN)

    Provide your ABN as it appears on your activity statement.

    G2 Name of main business

    Provide your business name as it appears on your activity statement.

    G3 Description of main business activity

    Describe the business activity from which the business derived the most gross income (for example, beef cattle breeder, clothing manufacturer, electrical contractor, building contractor, electrical goods retailer). Do not use general descriptions, such as farmer, manufacturer or wholesaler.

    G4Gross business income

    Provide estimates of the business income you will receive in the application year.

    (a) Payments covered by a voluntary agreement

    Provide the gross income covered by a voluntary agreement.

    (b) Other business income

    Provide your other business income, including personal services income derived as a self-employed contractor or consultant that is earned in the course of conducting a personal services business.

    Also include as income:

    • gross sales of trading stock
    • goods taken from stock for your own use
    • gross earnings from services
    • total payments received from which your payers withheld amounts because you did not quote your ABN
    • bad debts recovered
    • profit on sale of depreciable assets
    • royalties
    • insurance recoveries
    • employee contributions for fringe benefits
    • the total amount of grants, tax offsets, bounties and subsidies you received in relation to carrying on of a business
    • assessable non-government assistance from all sources.

    Do not include income already shown at E1 of NAT 2036.

    (c) Personal services income

    Include any income (other than income already shown at E1 of your NAT 2036) derived as a self-employed contractor or consultant that is not earned in the course of conducting a personal services business. Any expenses for which a deduction will be disallowed by the alienation measure should not be included in the amounts shown at G6(a) to G6(i).

    For more information, see Personal services income – basic information or phone us on 13 28 66.

    G6 Expenses

    Provide estimates of your business expenses for the application year.

    G8 Reconciliation items

    Environmental protection expenses

    Provide the amount of allowable expenditure on environmental protection activities. For more information, see subdivision 40-H of the Income Tax Assessment Act (ITAA) 1997.

    G9 Net income or loss from business

    If you do not have deferred non-commercial business losses, your net income from business amount must be transferred to E7 on your NAT 2036 and included in the calculation of your taxable income.

    Section H: Non-commercial business losses

    You must complete this section if you will have partnership or business losses, or if you intend to claim a deferred non-commercial business loss from an earlier income year.

    The non-commercial loss rules include an income requirement to further restrict the circumstances where a business loss can offset other income. To meet the income requirement for non-commercial loss purposes your other income must be less than $250,000.

    If you have both partnership and business losses, complete H1 for your partnership and H2 and H3 for your businesses. If you have more than one partnership or more than two businesses, attach a separate page with the required details.

    See also:

    A Description of business activity

    Describe the business activity from which you generated the loss.

    B Loss code

    Select the most applicable loss code from the following table.

    Table 1 – B Loss code and category

    Loss code

    Category

    1

    Your loss relates to a business activity with assessable income of at least $20,000.

    2

    The business activity has resulted in a profit for tax purposes in three out of the last five years.

    3

    The value of real property assets used in carrying on the business activity is at least $500,000.

    4

    The value of other assets (except cars, motorcycles or similar vehicles) used in carrying on the business activity is at least $100,000.

    5

    You obtained advice that the Commissioner of Taxation exercised his discretion allowing your losses to be deducted.

    6

    You operate a professional arts business and your assessable income for the income year (except net capital gains) from other sources not related to that activity is less than $40,000. A professional arts business is a business you carry on as an author of a literary, dramatic, musical or artistic work; a performing artist; or a production associate.

    7

    You operate a primary production business and your assessable income for the income year (except net capital gains) from other sources not related to that activity is less than $40,000.

    0

    None of the above codes apply.

    You cannot claim a loss for the income year. See below for more information about entering your loss code as '0'.

    Entering your loss code as '0'

    If you will have a loss for the income year and you have entered your loss code as '0', you cannot claim that loss or any deferred non-commercial business losses. You do not need to complete C and D in section H and you must not claim any of these losses at E6 or E7 or F2 on your NAT 2036. If you have a profit, see D for how to recoup deferred non-commercial business losses.

    C Loss for income year

    If you have a loss code at B (other than loss code 0), show the amount of loss you intend to claim at C. If you have deferred non-commercial business losses from an earlier year, see D below. If not, transfer the amount from C to E6 for a partnership, or E7 for a business on your NAT 2036.

    D Deferred non-commercial business losses

    If you were unable to deduct a business loss against other income in the year it arose, this is called a deferred non-commercial business loss. Show the value of deferred non-commercial business losses at D. You may be eligible to recoup some or all of your deferred non-commercial business losses in the following circumstances.

    (i) If you have made a profit from a business activity that is the same as, or similar to, that which gave rise to the deferred loss. If so, and (ii) below does not apply, you can recoup the deferred loss only to the extent of this profit. You must defer any remaining part of this deferred loss to the next year the activity, or an activity of a similar kind, is carried on. The amount to be shown at E6 for a partnership, or E7 for a business, on your NAT 2036 is only any excess profit remaining after the deferred loss has been recouped.

    (ii) If you have shown a loss code at B (other than loss code 0), add the amount at D to the amount at C and then transfer this total to E6 for partnership or E7 for business on your NAT 2036.

    Last modified: 20 Jan 2021QC 21681