PAYG Withholding Variation

Definition

A PAYG (Pay As You Go) withholding variation allows you to adjust the amount of tax your employer withholds from your wages each pay period. If you have a negatively geared investment property generating deductible losses, you can apply to the ATO to reduce your withholding — putting the tax benefit in your pocket each fortnight instead of waiting for a lump-sum refund at tax time.

Without a variation, a negatively geared property might generate a $10,000 annual loss but you wait until October (after lodging your return) to get the refund. With a PAYG variation, you get roughly $380/fortnight in your pay packet immediately — dramatically improving cash flow. The variation must be renewed each financial year.

Your property generates $12,000 in net deductible losses. A PAYG variation increases your take-home pay by about $462/fortnight (at 37% marginal rate) instead of waiting 14 months for a $4,440 tax refund.

TAA 1953, Section 15-15 — View on ato.gov.au →

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