Choosing the right PAYG instalment method
The ATO advises that Pay as you go (‘PAYG’) instalments are calculated using either the instalment amount method or the instalment rate method.
It recently provided the following two case studies to illustrate the two methods:
Case study 1: Kelly the DJ
Kelly is a DJ, working at festivals from November to January. She chooses to use the instalment rate method, as it suits her seasonal business income.
Using this method means she needs to work out her business income each period.
It helps her manage cash flow because the amounts she pays will vary in line with her income.
When Kelly receives her BAS or instalment notice, she calculates the instalment based on her income for that period, multiplied by the rate provided.
Case study 2: David the plumber
David is a plumber with regular monthly business income, so he chooses the instalment amount method.
He won’t need to work out his business income each period to use this method. David pays the instalment shown on his BAS. The amount is calculated from information in his last tax return.
If Kelly or David think the instalments they pay will add up to be more or less than their tax liability for the year, they can vary their instalments.
ATO says: "Be cyber wise, don't compromise"
Throughout the 2022 income year, one cybercrime was reported every seven minutes. The ATO encourages taxpayers to implement the following four quick steps to protect themselves.
Step 1: Install updates for your devices and software
Regular updates ensure taxpayers have the latest security in place which can help prevent cyber criminals from hacking their devices. They should also make sure they are downloading authorised and legitimate programs.
Step 2: Implement multi-factor authentication
Multi-factor authentication ('MFA') is a security measure that requires at least two proofs of identity to grant access. Businesses as well as individuals should implement MFA wherever possible. MFA options can include a physical token, authenticator app, email or SMS.
Step 3: Regularly back up your files
Backing up copies of files to an external device or the 'cloud' means taxpayers can restore their files if something goes wrong.
It is a precautionary measure that can help avoid costly data recovery.
Step 4: Change your passwords to passphrases
By using passphrases, taxpayers can boost the security of their accounts and make it harder for cyber criminals to access their information.
Passphrases use four or more random words and can include symbols, capitals and numbers. A password manager can help generate or store passphrases.
Claiming deductions in relation to a holiday home
Taxpayers should remember that they can only claim deductions for holiday home expenses to the extent they are incurred for the purpose of gaining or producing rental income.
They need to consider the following in determining whether the deductions they wish to claim are valid rental deductions:
How many days during the income year did they use or block out the property for their own use? Taxpayers cannot claim deductions for the periods the property was used or blocked out by them.
How and where did they advertise the property for rent, and is the rent in line with market values? If they only used obscure means of advertising, or put unreasonable restrictions or conditions in the advertisement, they may not be entitled to claim deductions.
Will any restrictions, or the general condition of the property, reduce interest from potential holiday makers? If their property is not in a tenantable condition, they may not be entitled to claim deductions.
Has the taxpayer or their family or friends used the property? Taxpayers cannot claim for periods of private use or when the property is kept vacant for personal reasons.
Is any part of the property off limits to tenants? When taxpayers claim deductions, they should ensure they calculate and apportion deductions in relation to the part of the property that is available for rent.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.