PAYG annual instalments - questions and answers

How often do I have to choose to pay my PAYG income tax instalments annually?

You may elect to pay an annual pay as you go (PAYG) income tax instalment if you meet the following requirements at the end of your first instalment quarter in an income year:

• your most recent notional tax as advised by the Australian Taxation Office (ATO) is less than $8,000
• if you are registered for the goods and services tax (GST) and you report and pay GST annually
• if you are a partner in a partnership registered for the GST and the partnership reports and pays GST annually
• in the case of a company, you are not part of an instalment group*, a participant in a GST joint venture, or the head company of a consolidated group.

*An instalment group is group of companies controlled by a head company whereas consolidated groups can include trusts/partnerships as well as companies.

You cannot choose to be an annual payer while you are the head company of a consolidated group.

If you wish to pay annual PAYG instalments, you must advise the ATO by the time your first quarterly instalment would normally be due (for most taxpayers this is 28 October).

You are not required to indicate your decision to pay annual instalments each year. Your decision will continue for future years unless your circumstances change, and you no longer meet the requirements to pay annually, or you advise the ATO that you no longer wish to pay annually.

If you no longer meet the requirements for paying instalments annually, we will advise you of your change in status and you will generally revert to paying quarterly instalments from the start of the next income year.

Similarly if you advise the ATO that you no longer wish to pay annually you will revert to paying quarterly instalments from the start of the next income year. We will send you the appropriate activity statements for reporting and paying your PAYG instalments.

If you are no longer an annual instalment payer, you can choose to pay annually again if you meet the requirements in a later income year.

More information Introduction to annual PAYG instalments Pay as you go (PAYG) instalments for consolidated groups