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  • Working out your PAYG instalments

    Pay as you go (PAYG) instalments are regular prepayments of your business and investment income tax. They can help you smooth out your cashflow and avoid a large tax bill when lodging your tax return. When you prepay your income tax using PAYG instalments, you may be eligible to choose how they are worked out:

    Option 1: instalment amount option – most popular option

    You pay the instalment amount shown on your business activity statement (BAS) or instalment notice. You don’t need to work anything out, and you can vary your instalment amount if you think it is too high or too low.

    Option 2: instalment rate option – better for seasonal or fluctuating income

    You work out your PAYG instalments by multiplying your instalment income by your instalment rate. It's important to report your instalment income accurately. For example, if you haven't earned any income for your reporting period, you'll need to report your income as $0.

    If you're eligible to choose how your PAYG instalments are worked out, both options will be shown on the first BAS or instalment notice that you receive for your financial year. You choose the option you prefer, and this will apply for your entire financial year.

    For more information, visit Calculate your PAYG instalments.

    Last modified: 05 Jun 2023QC 72761