act12.2A PAYG instalment payer can vary the PAYG instalments if theybelieve that their circumstances...act12.2A...

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Accounting

act12.2
A PAYG instalment payer can vary the PAYG instalments if theybelieve that their circumstances have changed and that they mightbe paying too little or too much. Consider the following scenario,the rates are examples only and do not reflect current tax rates.The ATO has calculated the businesses rate to be 18.75% based on anincome from the previous assessable period of $90,000. Theinstalment income for the first quarter (1 July to 30 September)was $21,000 and the second quarter (1 October to 31 December) was$15,000. The business has paid PAYG for the first two quarters ofthe year based on this rate but sales have dropped dramatically andexpected income for the year is anticipated to be around $60,000.They have calculated their estimated income tax to be $8,900.
a. Calculate the new instalment rate based on these figures
b. Calculate how much the business paid in the first twoinstalments
c. Calculate the variation credit that can be claimed and explainwhy it can be claimed. Show the calculations

Answer & Explanation Solved by verified expert

4.4 Ratings (626 Votes)

Hello hope this answer helps you Following is the calculation based on which the answers are given Step 1 90000 instalment income for earlier instalment quarters 90000 Step 2 1875 rate Step 3 90000 1875 2 84375 Step 4 See Answer

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In: Accountingact12.2A PAYG instalment payer can vary the PAYG instalments if theybelieve that their circumstances...act12.2A PAYG instalment payer can vary the PAYG instalments if theybelieve that their circumstances have changed and that they mightbe paying too little or too much. Consider the following scenario,the rates are examples only and do not reflect current tax rates.The ATO has calculated the businesses rate to be 18.75% based on anincome from the previous assessable period of $90,000. Theinstalment income for the first quarter (1 July to 30 September)was $21,000 and the second quarter (1 October to 31 December) was$15,000. The business has paid PAYG for the first two quarters ofthe year based on this rate but sales have dropped dramatically andexpected income for the year is anticipated to be around $60,000.They have calculated their estimated income tax to be $8,900.a. Calculate the new instalment rate based on these figuresb. Calculate how much the business paid in the first twoinstalmentsc. Calculate the variation credit that can be claimed and explainwhy it can be claimed. Show the calculations