Paying previous year or current year tax
When the Income Tax Instalment System (ITIS) was introduced in 2006, the system of paying tax on your earnings in the same year as the income is earned (current year basis) also commenced.
Therefore, if you first registered with us on or after 1 January 2006, you'll be paying tax under the arrangements for new taxpayers (current year basis). This means that you will have a deduction from your earnings that is calculated based on the income for that year and applied to that year's tax.
If you were registered for tax before 1 January 2006, (and are not exempt from tax) any deduction from your salary is calculated based on the year of assessment and applied to that year (prior year basis).
There is no advantage or disadvantage in the amount of tax you pay, the only difference is the tax year that your employer's tax deductions are allocated to.
If you wish to pay the tax in the same year as you are earning that income, you can make an election to pay tax on a current year basis.
Calculating your tax rate
Making an election to be taxed on a current year basis
To switch to paying on a current year basis, you must either be in a position where all of your previous tax is settled or there is no liability to tax in previous years.
If you believe you are eligible, download, print and complete the 'election to be treated as a current year taxpayer' form. We'll either notify you if your request has been successful or, if you have outstanding tax, we'll advise you on how much needs to be paid before you can switch to paying on a current year basis.
If you have any questions, contact us.
Download election to be treated as a current year taxpayer form (size 8kb)
Making provision to retire and payment on account cases
If you are paying prior year tax on employment income, but are looking to make provision for the year in which you retire, see the 'What happens when I retire?' page.
Planning income tax payments around your retirement