Common reasons you may receive a tax bill and action you can take to avoid a tax bill next income year.
Your tax assessment
The statement we issue that explains how your tax assessment is calculated is your notice of assessment (NOA). Your NOA will show if you will receive a refund or have a tax bill.
If you have a tax bill to pay, your NOA will include your payment advice and due date.
Reasons you receive a tax bill
You may receive a tax bill (amount you need to pay) for any of the following reasons:
- A tax offset is no longer available or you are no longer eligible for a tax offset – for example, the low and middle income tax offset ended 30 June 2022.
- Not enough tax was withheld from your income throughout the income year to meet your tax obligations, because
- you moved into a higher tax bracket – for example, through promotion, or you have multiple jobs or extra sources of income
- you have incorrectly claimed the tax-free threshold for more than one job –see, income from more than one job
- you’re the recipient of Australian Government allowances and payments.
- Your income increased leading to a higher repayment threshold for your study or training support loan.
- You have a study or training support loan and you didn’t advise your employer so they didn’t withhold an amount to cover your repayment liability.
- You receive income as an individual (sole trader) running a business, or from a partnership or trust.
- You have income as a sole trader and you haven’t paid enough in instalments through the income year through the pay as you go (PAYG) instalments system
- You receive additional income through the sale of a capital asset such as real estate, crypto assets or shares, this is a capital gains event.
- You receive income from investments or assets – for example, dividends on shares or rental income.
- You’re earning income from sharing economy activities – for example, ride-sourcing, renting out or sharing assets or providing personal services.
- Changes to your income (or your family status) affect your single or family income threshold and you may need to pay the Medicare levy or Medicare levy surcharge (MLS).
- The amount of private health insurance rebate you receive changes or is too much.
- You have exceeded the concessional contributions cap with your super fund.
- We find a difference between the details in your tax return and the information we receive through pre-fill data or our data matching program.
What to do if you have a tax bill
If you receive a tax bill, you will need to pay it by the due date on your notice of assessment.
If you can’t pay on time, it’s important to take action quickly while your debt is still manageable.
You may be eligible to set up your own payment plan, tailored to your circumstances.
If you’re still unsure why you have a tax bill or are having difficulty paying, contact us or speak with your registered tax agent.
Regardless of your situation or circumstances, personal crisis support is available.
If you’re experiencing financial difficulties or serious hardship and you’re finding it hard to lodge or pay your tax, we have support available.
How to prevent a tax bill
Most people who earn income as employees have tax payments made on their behalf throughout the income year through pay as you go (PAYG) withholding. These amounts help you to meet your annual tax obligations.
However, if you earn income that does not have tax withheld or does not have enough tax withheld, the following actions could help you prevent a tax bill:
Increasing tax withheld from payments
You may be able to vary your rate or amount of withholding to make sure that the amount withheld during the income year meets your end-of-year tax liability. You can ask one or more of your payers to increase the amount of tax they withhold.
If your circumstances warrant a withholding variation, you will need to work out if the variation is:
Voluntary entry into PAYG instalments
If you are new to business, or you think you will earn business and investment income over the entry thresholds, we recommend voluntary entry into PAYG instalments. You can arrange voluntary entry to PAYG instalments in ATO online.
If you lodge a tax return with instalment income above the entry threshold in your latest tax return we will automatically enter you into the PAYG instalments system. We will let you know when you have entered the PAYG instalments system.
You can make tax prepayments any time and as often as you like to make it easier for you to manage your tax. We will hold the prepaid amounts you make towards your expected bill unless you, or your agent, request a refund.
How much tax to set aside
Use our simple tax calculator to estimate how much tax you are likely to owe.
You can then plan how much money to set aside or pay through PAYG instalments or prepayments in future income years.