Calculate the variation credit that can be claimed

Assignment Help Accounting Basics

Reference no: EM133541769

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.

Calculate the new instalment rate based on these figures.
Calculate how much the business paid in the first two instalments.
1. I am not sure if the answer to this is figures actually made in the year $21,000+$15,000= $36,000 * 18.75% = $6,750 or is it based on the projected income for the year so $90,000 * 18.75% / 2 = $8,437.50
Calculate the variation credit that can be claimed and explain why it can be claimed. Show the calculations.

Reference no: EM133541769

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