Last Updated: 31st May, 2021

Do you own a negatively geared investment property?

Your employer is required to withhold tax during the year to cover your estimated tax liability from your employment income.

Those who have a negatively geared property investment will have less taxable income than their employer estimated due to their rental property loss offsetting their employment income.

In these cases, the employee does their tax and gets a tax refund for the overpaid tax at the end of the year.

Have less tax withheld from your pay

Many people like to get a big tax refund at year end, but why wait for your refund? Why not get it now? The Tax Office allows you to do just that.

You can lodge a Pay As You Go (PAYG) Withholding Variation which if accepted will direct your employer to withhold less tax from your pay and give more cash to you during the year.

This is an efficient tax strategy that can free up extra cash sooner to reduce debt, put into your offset account or invest more.

In particular people who have several properties which are significantly negatively geared may find it difficult to make ends meet if they don’t use a strategy such as this to manage their cashflow.

How to apply for the variation

Firstly you should discuss this option with your accountant to confirm that you are eligible and that this is suitable for you.

You can complete the electronic version of the form and submit it online for a quick assessment or you can print the form and mail it to the ATO which will take longer to assess.

Please call us on 1300 889 743 or enquire online if you would like to know further information about PAYG income tax withholding variation.

Get your figures right

The only trap is that you need to be accurate in your variation estimate otherwise you may have to pay penalty interest on the extra tax that you kept from the ATO.

You can usually make an accurate estimate using your tax return from last year combined with advice from your accountant.

Speak to an accountant

This information is general only and has been provided by Lucentor Pty Ltd who are accountants that specialise in tax for property investors.

We recommend investors obtain financial advice specific to their situation before making any investment or decision regarding their finances.