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One simple trick to increase your weekly take-home income

Posted by Paul Wilson

Here’s the thing that property spruikers and wealth creation “experts” often don’t share. Sometimes, life just doesn’t go the way we planned it.

You might be on track with your life and investments when you suddenly get thrown a curve ball that looks a lot like:

Losing your job unexpectedly A new addition to the family Less overtime work available Longer rental vacancies than you had budgeted for Extra expenses at your property that have gone beyond your budget

When your circumstances change like this, it can affect your cash flow and make it very difficult to meet the repayments on your loans.

In Australia, it’s possible to use a Tax Withholding Variation Form and have your weekly tax reduced. The idea of this is that you can submit a form to the ATO that projects what your tax return will be, so it can be paid periodically throughout the year in the form of less tax taken out of your pay packet.

In other words, instead of you receiving one lump sum tax return of $5,000 at the end of the financial year, you can receive an extra $100 in your pay packet each week.

You can find the right Tax Withholding Variation form for you via the ATO.

Of course, if you are receiving a portion of your tax return each week, then you will forgo your end-of-financial-year tax refund. But consider that the reverse is also true; you can use the form to pay more tax each week so you receive a bigger lump sum at the end of the financial year, if that suits you.

Whatever you decide, it is important to note these key points:

You still need to lodge a tax return if you have been granted a tax variation. Your actual tax liability will be determined when you lodge your tax return and any differences will be sorted out at the end of the financial year.

A new variation form must be lodged every new financial year.

If you change employment, a new variation form must be lodged – it will not be transferred.

Many property investors who have utilised tax variations have found them to very beneficial to manage cash flow (and often necessary when times are tough). If you’d like to discuss these in further detail, feel free to contact us now on 1800 690 890 and ask for Paul, or email paul@wefindhouses.com.au.

 

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