How One Small Business Saved $7,000 in Tax with a PAYG Variation

A small business recently saved $7,000 in tax by taking a proactive approach to their PAYG instalments. This real-world example demonstrates how staying on top of your tax obligations can significantly improve your cash flow.

The Challenge

The business was experiencing a downturn in revenue, yet their PAYG instalments remained based on their previous year's higher income. This meant they were at risk of overpaying taxes throughout the year – money that could have been better used to support their operations during challenging times.

The Solution: PAYG Variation

By working with our team at TT Accountancy, the business lodged a PAYG variation with the ATO. This allowed them to adjust their instalments to reflect their current income situation, keeping $7,000 in their business where it was needed most.

What is a PAYG Variation?

A PAYG variation allows you to:

• Adjust your tax instalments based on your current year's expected income
• Avoid overpaying tax when your income decreases
• Improve cash flow by keeping funds in your business
• Reduce the risk of a large tax bill at year-end if income increases

When Should You Consider a PAYG Variation?

You should review your PAYG instalments if:

• Your business revenue has significantly decreased
• You've had major changes in business circumstances
• You've made significant capital investments that affect taxable income
• Your business structure has changed
• Market conditions have impacted your profitability

The Bottom Line

"It's a small reminder that when it comes to tax, being proactive pays off."

This case demonstrates that regular reviews of your tax position can lead to significant savings. Don't wait until year-end to discover you've overpaid – take action now to optimize your cash flow.

How We Can Help

At TT Accountancy, we regularly review our clients' PAYG obligations to ensure they're not overpaying tax. Our proactive approach to tax planning helps businesses maintain healthy cash flow while staying compliant with ATO requirements.