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  • PAYG instalments

    Pay as you go (PAYG) instalments help you budget for your income tax and keep a healthy cash flow. By making regular payments during the year (through your activity statements) you won't have to pay a large tax bill when you lodge your tax return.

    You'll pay PAYG instalments if you earn business and/or investment income (which is also known as instalment income) over a certain threshold.

    When you lodge your tax return, all the amounts you've paid during the year will be offset against any tax you owe for the year.

    To make sure your tax assessment takes into account the instalments you've paid throughout the year, you need to lodge your activity statements and pay all your PAYG instalments before you lodge your tax return.

    You can generally choose between two options for calculating and paying your PAYG instalments. The option you choose will apply for the whole income year.

    On this page:

    Instalment amount (option 1)

    Paying by instalment amount is the simplest option as you don’t need to make any calculations. You pay the amount that we have worked out for you based on information you reported in your most recent tax return.

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    Instalment rate (option 2)

    When you pay using the instalment rate, you work out your instalment amount yourself using:

    • the instalment rate we provide
    • your instalment income.

    The benefit of this method is that your instalments are based on your income as you earn it, instead of an estimate based on your most recent tax return. You may prefer this method if your income changes throughout the year.

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    PAYG instalment notice

    If you pay using the instalment amount and have no other obligations that require you to lodge an activity statement, we will send you an instalment notice. You don't need to lodge this notice – you just need to pay the amount by the due date.

    If you think your instalment amount doesn’t reflect your current circumstances, you can vary it.

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    Your PAYG instalments communications

    Your PAYG instalment amount is available online three to four days after the activity statement generate date.

    If you're an individual taxpayer (including if you're in business as a sole trader) and you've registered for myGovExternal Link and linked your account to the ATO, your PAYG instalments correspondence will be delivered to your myGov Inbox. We'll send you an email or SMS to let you know when an item is available in your myGov Inbox.

    If you use Online services for business or Standard Business Reporting enabled software and we have your email address, we'll send an email with your instalment amount and reminder to pay 21 days before the due date. Check your email address is up to date in our online services.

    If you still receive paper mail from us, we'll send your activity statements and letters about PAYG instalments to the address we send your 'income tax' correspondence to. If you want your activity statements or instalment notices sent to a different postal address, contact us. Alternatively, if you want to receive these online, register for our online services.

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    Last modified: 21 Jul 2021QC 33680