• How to vary your instalment amount (option 1)

    If you are a quarterly payer who pays an instalment amount we calculated, either by paying two or four instalments each year, you will see an amount printed in box T7 in option 1 on your quarterly activity statement or instalment notice.

    Usually, T7 is an amount we calculate based on your notional tax but adjusted for likely growth in your business and/or investment income (based on growth in Australia's GDP).

    If you varied your instalment amount in a previous quarter of the income year, the amount in box T7 will be your varied instalment amount.

    If you calculate your instalments using the instalment rate x instalment income method (option 2 on your activity statement), you will need to vary your instalment using option 2.

    Step 1: Decide whether you want to vary

    You may want to vary your instalment amount up or down if your situation has changed since your last tax assessment, for example, you expect your business and/or investment income to be significantly less.

    Even if you have received more business and/or investment income compared to last year, you do not need to vary if you pay the instalment amount that we calculated.

    If your situation has not changed since your last tax assessment there is no need to vary.

    If you vary your instalment amount, use the varied amount for each subsequent quarter in the income year, unless you choose to vary the amount again in a later quarter.

    You can use our PAYG instalments calculator to work out if you need to vary or not.

    PAYG instalments calculator – for individualsPAYG instalments calculator – for companies

    Step 2: Estimate the tax on your business and investment income for the year

    You can use the worksheet or the PAYG instalments calculator to estimate your tax.

    If you expect to have no business and/or investment income for the full year, you can vary to zero. In this case, you do not need to work through the tax estimate worksheet. Your varied instalment amount is zero. Go to step 4.

    You can also vary to zero if you expect your deductions against your business and/or investment income to be more than the income itself for the full year, for example, you may have a negatively geared investment property. If you are not sure, use the worksheet to estimate the tax on your business and/or investment income.

    Activity statements with nil amounts at all labels (including instalment income) can be lodged over the phone on 13 72 26. You cannot lodge over the phone for the quarter you vary to nil, but you may for later quarters where there are no other obligations to report.

    Next steps:

    Step 3: Work out the proportion of your estimated tax to pay in this instalment

    The amount you pay depends on the quarter you are paying for, and how much you paid in previous quarters.

    If you pay four quarterly instalments per year, use table A to work out the proportion to pay.

    If you pay two instalments per year, use table B to work out the proportion to pay. If you are notified of an instalment rate for the first time during the second, third or fourth quarters of the income year, you may be required to pay a lesser amount. Use table C to work out the proportion to pay.

    Table A: Four instalments – proportion to pay in a quarter

    Instalment quarter

    Varied instalment amount

    First quarter in the income year that you are liable to pay an instalment

    • 25% of your estimated tax for the income year

     

    Second quarter for that income year

    • 50% of your estimated tax for the income year
    • Minus the amount of your 1st quarter instalment

     

    Third quarter for that income year

    • 75% of your estimated tax for the income year
    • Minus the amount of your 1st and 2nd quarter instalments
    • Plus any credit you claimed for the 2nd quarter instalments

     

    Fourth quarter for that income year

    • 100% of your estimated tax for the income year
    • Minus the amount of your 1st, 2nd & 3rd quarter instalments
    • Plus any credit you claimed for the 2nd & 3rd instalment quarters.

     

     

    Example 1
    Jane receives income from her investments. We have calculated her quarterly PAYG instalment amount to be $1,000. Jane pays this amount in her first quarter (1 July to 30 September) and second quarter (1 October to 31 December).

    In January, Jane sells a portion of her investments and decides to vary her PAYG instalment amount to take into account her new situation. Jane estimates her tax payable on business and/or investment income for the year will be $3,100. For her third quarter (1 January to 31 March), Jane works out her varied PAYG instalment as follows: 

    Jane’s estimated tax $3,100

    x 75% (3rd quarter proportion) $2,325

    minus 1st & 2nd quarter instalments $2,000

    amount to pay in 3rd quarter instalment $ 325

    End of example

    Table B: Two instalments – proportion to pay in a quarter

    Instalment quarter

    Varied instalment amount

    The instalment due in April (third quarter instalment)

    • 75% of your estimated tax for the income year

     

    The instalment due in July for the income year

    • 100% of your estimated tax (4th quarter instalment)
    • Minus the amount of your April instalment (3rd quarter instalment)

     

    Table C: Two instalments – proportion to pay where you are first given an instalment rate during the second, third or fourth instalment quarter

    If you’re first given an instalment rate in the second instalment quarter

    (October – December quarter)

    Your varied instalment amount for the third instalment quarter (January-March quarter) is:

    • 50% of your estimated tax for the income year

     

    Your varied instalment amount for the fourth instalment quarter (April-June) is:

    • 75% of your estimated tax for the income year
    • minus the amount of your third quarter instalment

     

    If you’re first given an instalment rate in the third instalment quarter

    (January – March quarter)

    Your varied instalment amount for the third instalment quarter (January-March quarter) is:

    • 25% of your estimated tax for the income year

     

    Your varied instalment amount for the fourth instalment quarter (April-June) is:

    • 50% of your estimated tax for the income year
    • minus the amount of your third quarter instalment

     

    If you’re first given an instalment rate in the fourth instalment quarter

    (April – June quarter)

    Your varied instalment amount for the third instalment quarter (January-March quarter) is:

    • not applicable

     

    Your varied instalment amount for the fourth instalment quarter (April-June) is:

    • 25% of your estimated tax for the income year

     

      Last modified: 11 Aug 2016QC 16159