Pay Less Tax Throughout the Year with Your Investment Property

If you have a negatively geared property, the ATO gives you the option to pay less tax throughout the year rather than receiving a large tax return. This can be achieved with an Income Tax Withholding (ITW) Variation.


What is an Income Tax Withholding Variation?

An ITW variation allows those who have a negatively geared property to have less tax taken from their salary or wages throughout the year rather than having a sizable tax return. This is achieved by lodging an Income Tax Withholding Variation Form. The ATO instruct your employer to take less tax out of your wages based on estimates provided in the form.


What are the Benefits of an ITW Variation?

Although some people enjoy receiving a large tax return, paying less tax throughout the year can be particularly useful for people with loans or cash flow problems. It is also an opportunity to set a budget for your property for the year and to have the figures reviewed by an accountant (we can see if the rent hasn’t gone up since the previous year and check your interest on loans).


When an ITW Variation is Not a For You

It is not advisable to lodge an ITW if you have sold or plan on selling a property subject to capital gains tax during the year ended 30 June 2013. An adjustment may be required if your circumstances change; such as increase in rental income, increase in salary or wages, reduced interest paid on investment loans, etc.


When Should I Organise an ITW Variation?

You usually need to lodge an ITW Variation for the next tax year before April prior to the end of that tax year. However, if you wish to receive the ITW variation for as long as possible it’s best to lodge your ITW variation early in the financial year or soon after you have purchased a negatively geared property. If you lodge your ITW variation later in the year you will still receive the excess you have paid in your tax return.


If you would like help or advice on ITW Variations please contact us.



by Carol Allan

Carol is a Senior Accountant at Insight Accounting advice. She is a registered tax agent, has a Bachelor of Commerce and Advanced Diploma in Accounting. Carol’s areas of expertise include tax and property advice.



The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.