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Question: A PAYG instalment payer can vary the PAYG instalments if they believe that their circumstances have changed and that they might be paying too little or too much. Consider the following scenario, the rates are examples only and do not reflect current tax rates.
The ATO has calculated the businesses rate to be 18.75% based on an income from the previous assessable period of $90,000. The instalment income for the first quarter (1 July to 30 September) was $21,000 and the second quarter (1 October to 31 December) was $15,000.
The business has paid PAYG for the first two quarters of the year based on this rate but sales have dropped dramatically and expected income for the year is anticipated to be around $60,000. They have calculated their estimated income tax to be $8,900.
What is the total production per month if the change is made? What is the increase in the expected monthly product contribution for each of possible changes?
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