GST instalments

If you elect to pay GST by instalments, you pay a quarterly GST instalment that we work out for you and you report your actual GST information annually on an annual GST return.

We work out the instalment amount to pay based on:

  • the net GST amounts you most recently reported, generally for the past income year, depending on how long you have been registered for GST
  • a gross domestic product (GDP) adjustment.

We print this amount on your activity statement.

If you think that using this amount will mean you pay more or less than the GST liability you expect for the year, you can vary it. However, if you vary this amount down and pay less than you should for the year, you might have to pay penalties. We recommend you seek professional advice from your tax or BAS agent before varying your instalments.

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Paying by instalments

You can elect to pay GST by instalments if you:

  • are carrying on either a small business with an annual turnover, including the turnover of your related entities, of less than $2 million and meet the small business entity test or an enterprise that is not a business that has a GST turnover of less than $2 million
  • lodge your activity statements quarterly – if you have been lodging monthly, you can change to quarterly lodgment if you are eligible so that you can use the instalments option
  • are up to date with your lodgment
  • are not in a net refund position
  • have a current GST lodgment record of at least four months  
    • If you are a new business and you have lodged an activity statement for two quarters and paid GST to us in the second quarter. This is because your GST instalment amount must be based on a previous GST amount payable.
    • If, at the end of your most recent tax period, you have been registered for GST for six months or less, you have until the due date of your activity statement for the quarter in which you first become eligible to make your election.
    • For example, you register for GST on 1 April 2012 and report on a quarterly basis. To be eligible to elect to report GST by instalments (and for us to calculate an instalment amount) you must have lodged two quarterly activity statements (that is, June 2012 and September 2012). We will notify you of your eligibility on your December 2012 quarterly activity statement (due 28 February 2013 in most cases). You will need to tell us of your intention to report GST by instalments by making your election on the December quarter activity statement and lodging the activity statement by the due date.

If you are the representative member of a GST group, you may only elect to pay GST by instalments if all members of the group are eligible. The instalments you will pay will be on behalf of all members of the GST group.

Generally, you must elect to pay GST by instalments by 28 October in the financial year in which your election relates.

Note: You do not need to re-elect to use the instalment option each financial year. Your choice will continue as long as you remain eligible.

Carefully consider these points before choosing the instalment option:

  • with this option, we only pay refunds after you lodge your annual GST return, not each quarter
  • if you choose to vary your GST instalment amount and it is too low, we may impose a penalty.

You must have lodged an activity statement for at least one of the following:

  • one month and one quarter
  • two quarters
  • four months if you previously lodged your activity statement monthly

You must not:

  • lodge your activity statement monthly
  • be in an overall GST net refund position in the previous year, not including the first activity statement you lodged
  • have any overdue activity statements.

Net refund position

A net refund position means that your total GST credits for the previous activity statements were more than the total GST you were liable for. If you elect to pay your GST by instalments and you subsequently move into a net refund position, you will have continued access to the GST instalment system until the end of the current financial year. If, after that, you want to move to a different GST reporting option, you must do so before the following 28 October. If you do not notify us before this date, you must stay with the instalment option for the rest of that financial year.

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    Last modified: 24 Aug 2016QC 16380