Application for Holdover of Provisional Tax

Yes. You should make an application within the time limit described in A8 and A9, state the ground for holdover as "entitlement to child allowance for 2012/13" and supply the name and the date of birth of your child.

From what you have said, you may anticipate a drop of income to $570,000 for 2012/13.

The criterion for holding over is that your net chargeable income for the provisional tax year is less than 90% of that of the preceding year. Hence, it is necessary to ascertain your estimated net chargeable income for 2012/13 in order to consider whether you can apply for holding over of part of your provisional salaries tax. The net chargeable income is arrived at by deducting allowable deductions and allowances you are entitled to claim from your income.

The situation will therefore be different depending on whether you are single or married (assuming spouse having no income - you are entitled to claim Married Person's Allowance). To demonstrate arithmetically:

Situation 1 - You are single
 

As the estimated net chargeable income for 2012/13 is more than 90% of that of 2011/12 ( that is, $450,000 > $442,800 ), no part of your provisional salaries tax for 2012/13 can be heldover.

Situation 2 - You are married and your spouse has no income (you are entitled to Married Person's Allowance)
 

As the estimated net chargeable income for 2012/13 is less than 90% of that of 2011/12 ( that is, $330,000 < $345,600), you can apply for part of your provisional salaries tax for 2012/13 to be heldover.

Situation 3 - Same as Situation 2 but with one child
 

As the estimated net chargeable income for 2012/13 is less than 90% of that of 2011/12 ( that is, $267,000 < $291,600), you can apply for part of your provisional salaries tax for 2012/13 to be heldover.

For any taxpayer fall within Situation 2 and 3 above, the Assessor will allow holdover of part of the provisional salaries tax provided a written application for holding over is lodged within the prescribed time limit, and the reason for the salary reduction and the estimated income for the period from 1 April 2012 to 31 March 2013 are provided.

Please refer to A8 and A9 below for time limit on lodgment of application.
 

If your net chargeable income (net total income minus total allowances) for the year to 31 March 2013 will be less than 90% of your net chargeable income for the year to 31 March 2012 you can apply to pay less provisional tax.

Application should be lodged 28 days before due date or within 14 days after the issue of the demand for provisional tax. Application for holdover of provisional tax must be made in writing, lodged with this Department within the prescribed time limit. Where an application is lodged on the ground of fallen income for 2012/13, you should furnish a computation to demonstrate a drop of the net chargeable income by more than 10%, when compared with that for 2011/12.

As most taxpayers would have their 1st instalment of tax due in January 2013, the most appropriate time to lodge holdovers will be in November and December 2012. By that time, you should know the actual income figures for the 7 months to 31 October 2012, and you should be in a better position to estimate your income for the remaining 5 months to 31 March 2013.

In summary, you should not furnish details of “no pay leave” for April and May 2012 in your 2011/12 tax return. To lodge an application for holdover now would be pre-mature and you should apply after you have received your demand note for provisional tax and when you are in a better position to make a projection for the full year's income.

If your estimated net chargeable income (net total income minus allowances) for the year to 31 March 2013 will be less than 90% of your net chargeable income for the year to 31 March 2012, you can apply for hold over of provisional tax.

The following example illustrates how the estimated net chargeable income for 2012/13 is computed.

Example - You are single and your employment income for the year to 31 March 2012 is $600,000.

As the estimated net chargeable income for 2012/13 is less than 90% of that of 2011/12 (that is, $430,000 < $442,620), you can apply for part of your provisional salaries tax for 2012/13 to be heldover. Your written application for holding over should be lodged within the time limit prescribed in Answers 8 and 9 by stating the ground for holdover.

If your estimated net chargeable income (net total income minus allowances) for the year to 31 March 2013 will be less than 90% of your net chargeable income for the year to 31 March 2012, you can apply for holding over of provisional tax.

The following examples illustrate how the estimated net chargeable income for 2012/13 is computed.

Example 1 - You are single and your employment income for the year to 31 March 2012 is $500,000.

As the estimated net chargeable income for 2012/13 is more than 90% of that of 2011/12 ( that is, $360,000 > $352,800 ), your provisional salaries tax for 2012/13 can not be heldover.

Example 2 - You are married and your spouse has no income (you are entitled to Married Person's Allowance). Your employment income for the year to 31 March 2012 is $500,000.

As the estimated net chargeable income for 2012/13 is less than 90% of that of 2011/12 ( that is, $240,000 < $255,600), you can apply for holding over of part of your provisional salaries tax for 2012/13. Please refer to A8 and A9 below for time limit on lodgment of application.

Yes. If the amount of Elderly Residential Care Expenses paid or payable for 2012/13 exceeds $72,000, you may apply in writing for holding over of part of the 2012/13 provisional salaries tax upon receiving the assessment and notice for payment of provisional tax. In computing the provisional salaries tax payable for 2012/13, the deduction allowed will be restricted to the maximum of $76,000.

Please refer to A8 and A9 below for time limit on lodgment of application.

Yes. If the amount of mandatory contributions paid or payable for 2012/13 exceeds $12,000, you may apply in writing for holding over the 2012/13 provisional salaries tax upon receiving the assessment and notice for payment of provisional tax.

Please refer to A8 and A9 below for time limit on lodgment of application.

Usually the time limit for holdover is 28 days before the due date. Hence, in respect of all or a part of the 1st instalment of tax, you should lodge an application for holdover on or before 5 December 2012. Any holdover application in connection with the 2nd instalment of tax should be lodged on or before 5 March 2013.

Actually the law provides for a two-tier time limit. You must lodge an application not later than 28 days before the due date for payment of the provisional tax or 14 days after the date of issue of the notice for payment of the provisional tax, whichever is the later. The 28th day prior to due date is 21 January 2013. The 14th day after the date of issue of the demand note is 18 January 2013. Hence, insofar as the holdover of the 1st instalment of tax due on 18 February 2013 is concerned, your application should be lodged on or before 21 January 2013.