ALL QUESTIONS NEEDS TO BE ANSWERED UNDER AUSTRALIAN TAXATION RULES 2 Payments an

Question

ALL QUESTIONS NEEDS TO BE ANSWERED UNDER AUSTRALIAN TAXATION RULES

2 Payments and Re uments and Recovery of Tax -- Interest on overpayment or early payment of tax Pauline, an individual resident, paid her 2015/16 tax liability of $3,800 on 1 August 2016 at the same time as she lodged her return. She received an assessment on 31 August 2016. The due date was to be 22 November 2016. Toby, an individual resident, began working for XYZ Co. on 1 July 2015. Their payroll department made a mistake in calculating the withholding amounts from Toby's monthly salary, effectively deducting $14,000 too much PAYG tax during the 2015/16 year. The end result of this was that Toby received a refund of $13,700 upon receipt of his 2015/16 assessment on 12 November 2016. Leanne, an individual resident, received her 2015/16 assessment showing that $8,900 was payable on 24 February 2017. She paid the full amount early on 13 February 2017. For each of these taxpayers indicate whether they could expect to receive some interest FROM the Commissioner for early payment or overpayment of tax.

Explanation / Answer

As per ATO, A tax payment made for income tax (including Medicare levy and Medicare levy surcharge) will qualify for early payment interest if the payment is made more than 14 days before the due date.

Since Pauline has made the early payment more than 14 days & $50 cents so she is liable to receive the interest on early payment.

As per ATO The following payments do not attract early payment interest: pay as you go (PAYG) withholding amounts including amounts withheld from interest, dividends and royalties and amounts withheld by payers (including those withheld for the purpose of repaying contributions or debts under HECS-HELP)

Since Toby payment has been made through PAYG, so she is not entitled for the interest.

As per ATO, A tax payment made for income tax (including Medicare levy and Medicare levy surcharge) will qualify for early payment interest if the payment is made more than 14 days before the due date

Since Leanne made the payment less than fourteen days , she is not liable to receive the interest.

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