PAYGWV – the little known acronym with the VERY BIG benefits!

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PAYGWV – the little known acronym with the VERY BIG benefits!

You probably guessed the first 4 letters right? Pay As You Go.. but what does the WV stand for and why should I even care? Read on..

The PAYG withholding variation (PAYGWV) is a little known tool of particular benefit to property investors with negatively geared investment properties. Basically the PAYGWV allows you to forgo that big lump sum tax return at the end of the financial year and get more cash in your weekly, fortnightly or monthly pay packet instead.

Why would you want to do that? Agreed, some people love the end of financial year windfall. Many family holidays are booked and paid for on the back of a healthy tax return. Thanks Government! But wait, they don't call it a tax 'return' for no reason.

That's right, when you get a tax return at the end of the financial year you are really just getting back your own hard earned cash. The ATO is actually just 'returning' the tax you paid that you didn't actually need to. 

So What? It's like forced savings isn't it? Well, yes it is. Kind of. But no. There is a better way. If the ATO returned your tax with interest I'd be a little bit more comfortable with that. Unfortunately the ATO presumably makes and keeps any interest earned on your over-payments. 

This is where the PAYGWV comes in very handy. The PAYGWV is a simple application that you or your accountant lodges with the ATO who then gives authorisation to your employer to withhold less tax from your salary. Meaning more cash in your hand each pay.

More cash in your hand each pay means you can make your hard earned cash work even harder for you. Off-set interest, pay down debt, pay off your credit cards or stash it in a high interest earning account. Any of these things is way better use of your money than having the ATO 'mind' it for you! 

Speak to your accountant about how a PAYGWV might benefit you and start making your hard earned cash work even harder for you. If you need a good accountant please don't hesitate to ask for an introduction to one of our trusted partners.

And feel free to contact us about other ways you can improve the value and return on your investment property and grow your portfolio faster.

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