PAYG instalments allows you to pay your expected tax liability on your business and/or investment income for the current income year.
We use your last assessed income tax return to calculate and advise you of either:
- a PAYG instalment amount that you pay
- an instalment rate that you can use to work out your instalment amount yourself.
Some payers pay two PAYG instalments a year. These payers (such as some primary producers and special professionals) are eligible to pay two instalments each year.
You will receive a quarterly activity statement or instalment notice that tells you your tax obligations, including your PAYG instalment amount or rate.
From 1 January 2014 taxpayers who meet the required threshold, commenced paying their tax obligations monthly instead of quarterly. This guide will help you work out how to vary your instalment amount or rate on your activity statement or instalment notice.
When you can vary PAYG instalments
You can choose to vary your PAYG instalment rate or instalment amount if you estimate your business and/or investment income and the tax on this income, and you think the amount or rate:
- we calculated will mean you will pay more (or less) than your expected tax for the income year
- you varied earlier will mean you will pay more (or less) than your expected tax for the income year.
You must then use the varied amount or rate for the remaining instalments in the income year, unless you vary again. If you do elect to vary your PAYG instalment rate or instalment amount, you must notify us in the approved form (your activity statement or instalment notice) on or before the day when the instalment is due.