While most people look forward to receiving a tax refund once their return is processed by the ATO, it is also not unheard of to receive a
tax bill on occasion.
Most people who earn income as employees have tax payments made on their behalf throughout the year through pay-as-you-go (PAYG) withholding to help them meet their annual tax obligations. But this withholding of amounts can sometimes miss the mark.
You may receive a tax bill if you have not had a sufficient amount withheld from your income throughout the year to meet your tax obligations. This may occur in the following circumstances:
Note that tax is not withheld from every single source of income. For example, the following income sources do not generally have tax amounts withheld:
If tax is not withheld when you receive payments from income earned as a sole trader or from investments, you can voluntarily enter into PAYG instalments. This is a way of prepaying tax and reduces the chances of having to pay a large amount at the end of the income year.
It is also possible to make tax prepayments any time and as often as you like to make it easier for you to manage your tax. The ATO will hold the prepaid amounts you make towards your expected bill unless a refund is requested.