When you should vary your PAYG instalment amount or instalment rate
The instalment amount or instalment rate we calculated, is based on your business and/or investment income tax from your last assessed income tax return.
Usually, you would vary only if your situation has changed and you think the amount or rate we calculated will result in you paying significantly more (or less) than your expected tax payable on your business, and/or investment income for the year.
You don't have to vary your PAYG instalment if the amount or rate we calculated results in you paying too much – you will receive a refund of any overpayment when we assess your income tax return.
If the instalment amount or instalment rate we calculated is insufficient to meet your income tax liability for the year, you simply pay the balance owing when we assess your income tax return.
If you use the instalment amount or instalment rate we calculated, there's no risk of GIC.
When your income tax return is processed, we'll credit your PAYG instalments against your assessment to calculate whether:
- you owe more tax
- we owe you a refund.
You may want to vary the instalment amount we calculated because of significant changes in your income or tax situation. For example, if you:
- reduce or expand a share portfolio
- receive significantly lower or higher dividends from a share portfolio
- use savings or investments for private purposes that reduce the amount of income you receive
- sell or buy an investment property
- receive more or less rent from a property
- cease to earn income from business activities
- have much higher or lower expected tax deductions for about the same level of business and/or investment income
- have less or more business and/or investment income but about the same level of expected tax deductions (for example, your running costs are about the same)
- have repaid your Higher Education Loan Programme (HELP) or Financial Supplement debt.
An instalment rate is a percentage figure that approximates the proportion of your business and/or investment income that you must pay as tax, based on your last assessed income tax return.
To work out the amount of your PAYG instalment, multiply the instalment rate by your instalment income for a quarter.
There is no need to vary just because your income has gone up or down since your last tax assessment. The instalment rate is a percentage, so the amount you pay will go up or down with your income.
Usually, you would vary your instalment rate only if there is a significant change in the proportion of your business and/or investment income that will be paid as tax. For example, if you have either:
- much higher or lower expected tax deductions for a similar level of business and/or investment income
- less or more business and/or investment income for the same level of expected tax deductions (for example, your running costs are about the same).