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ITWV Forms - Consequences for incorrect info?

Discussion in 'Accounting, Tax & Legal' started by Insan3, 18th Apr, 2008.

  1. Insan3

    Insan3 Active Member

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    Hi all,

    Been pondering a bit lately about ITWV applications....
    Is there any penalty/recourse for incorrect information?

    As long as you pay your Tax Bill by the due date after lodging your return, no harm is done - you still pay your fair share.

    What would be the consequences if you 'doctored' figures to have the ATO assess your Tax at 0%, used these funds to pay down Loans (assume a Std Variable Rate PPOR Loan), then when you do the return and it is assessed you should have paid $10,000 - draw this $10k out, pay it, then repeat the process.....

    Better have the money I lose in Tax each week accumulating in my Home Loan reducing Non Ded. interest, then I'll take it out in a lump sum :)
     
  2. BSB

    BSB Well-Known Member

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    You MAY get away with it.....ONCE!

    But, I suspect thereafter they'd treat you with caution.
    And knowingly providing false information will eventually lead you into trouble.
    I think the word is "fraud".
     
  3. Insan3

    Insan3 Active Member

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    Hmmm. Harsh Response. That's cool though.
    It was just a theory I thought I would put forward.
    Providing false information is only fraud if perpetrated for profit or to gain some unfair or dishonest advantage. Wouldn't be so in this case, you'd still pay the same amount of tax, just in a different payment frequency.

    Most of us spend hours structuring our finances in a way to maximise Negative Gearing, Debt Recycling, Tax Minimisation, etc, etc. That is not fraud, just using what we have available to us under the system. Never heard of anyone trying this, also never heard of anyone saying it was illegal.

    That said, I appreciate that 'doctoring the figures' on an ATO form is likely to be illegal!

    I have also discovered anyway that you can't do an ITWV if you owed the Tax Office from previous year/had a Debit Assessment. So, you could only do it for one year at a time anyway.

    I guess I find it annoying that people who could pay Tax in one hit at EOFY can't. I would much rather pay $10,000 in July than $200 every week.....
    That said - I/We/Investors would be the exception rather than the rule.
     
  4. DaveA

    DaveA Well-Known Member

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    i think with the ITWV you can be fined if you dont estimate your income to be within 10% of your actuall assessment.

    Also tax isnt paid until late March after the financial year (so 9 months delay) regardless of how early you put your return in... Something to consider and if it was worthwhile you could estimate that your income would be 92k instead of 100k. Youd get a 3.5k interest free loan for a weighted average time of ~14 months. At 10% that saves you $350 in PPOR interest. Not really worth it IMO as you would still have the downside risk.

    Now you could on July 1 estimate your taxable income will be $15k, and then say in Feb you put a revised one in saying it will be move and see how you get away with it
     
  5. Rob G.

    Rob G. Well-Known Member

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    Cheers,

    Rob
     
  6. Insan3

    Insan3 Active Member

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    DaveA - can you explain this further? My tax has always been payable around late November. I submit using e-tax around Sep/Oct....

    I did say it would be paid by due date... ???

    I don't understand what is reckless about paying a bill in one lump sum.....Reckless and Not allowed within the rules are 2 very different things.....And I'm not advocating/creating this 'scheme'. Simply an idea I would throw out...

    Interesting to see the feedback. As I said earlier, just a thought.
    I understand that is the system, that's that, it's the law. That said - businesses have far more options regarding payments. They can have money stored, saving/earning interest until they have to make payments, and this is OK - 'Cashflow', etc.
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Accountants (and I assume tax agents too) have until March or there-abouts the following year to get the tax returns completed for their clients.
     
  8. Insan3

    Insan3 Active Member

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    Thanks Sim.

    So how does that work with regards to the cutoff date of October 31?
    Do the agents request an extension?
     
  9. Rob G.

    Rob G. Well-Known Member

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    You've missed the whole point with PAYG.

    It is to prevent you holding onto the money due until the last minute and paying in one lump sum.

    The ATO wants the money approximately as your income emerges.

    So for people on quarterly instalments, the first 3 payments are based on an estimate from last year (plus an uplift factor) while your final assessment takes care of any errors and credits you with tax already paid.

    To deliberately misinform the ATO about your instalment liabilities so you can retain the use of the money for longer is to invite penalties in addition to the GIC for overdue tax ON THOSE INSTALMENTS.

    Cheers,

    Rob