Tip #29 – Pay as you Go Withholding Tax

One way to improve your cash flow is by varying the amount of tax you need to pay on a weekly or monthly basis.

Essentially, you can reduce your tax payable throughout the year rather than waiting until the next financial year to claim deductions such as depreciation.

It puts money in your pocket earlier and helps fund your investment property.

Your employer is not allowed to reduce the rate of tax you pay without approval from the ATO.

So, you can download a form (ato.gov.au) to explain to the ATO all the deductions you expect in the coming year.

Having the immediate cash flow can lessen the burden of the property costs – particularly for those people highly geared.

You will need to provide all the usual information about yourself and your employer.

And when it comes to the deductions section – you need to let the ATO know what interest will be payable for the year ahead, rates and other deductions, along with what depreciation and capital works deductions you expect to claim.

This is where a Quantity Surveyor’s report can assist you – so it’s worthwhile to get a depreciation schedule as soon as settlement occurs.

I’d suggest you complete the form with your accountant to be safe.