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  • Option 2 – instalment rate

    If you pay using Option 2 'instalment rate', you'll work out the pay as you go (PAYG) instalment amount yourself using the rate we provide and your instalment income.

    All taxpayers can use this option. However, you must use this option if you're a:

    • super fund with business and/or investment income over $2 million
    • a company with business and/or investment income over $2 million and do not qualify as a small business entity.

    The main advantage of Option 2 is that your instalments are based on your income as you earn it, instead of a projection based on your previous tax situation. This helps with cash flow management. For example, if your income in a quarter is zero, the amount to pay for that quarter is zero.

    With this option, you pay a proportion of your business and/or investment income (your instalment income) for the quarter or income year just gone. You work out the amount to pay using the instalment rate, which is shown at T2 on your activity statement.

    It works like this:

    • instalment income (T1)
    • multiplied by ATO instalment rate (T2)
    • equals instalment amount (5A).

    Example

    If your instalment income is $106,000 and our instalment rate is 11%, your tax instalment amount will be calculated as follows:

    $106,000 (T1) multiplied by 11% (T2) = $11,660 (5A).

    End of example

    Instalment rate of nil

    If you decide to pay using Option 2 'Instalment rate', and we provide you with an instalment rate that is nil, you will still need to provide details of your instalment income on your activity statements as a nil rate is a valid rate.

    If you prefer to use this option you simply complete the details under Option 2 on your activity statement. If the instalment rate does not reflect your expected tax liability for the current income year, you can vary the instalment rate.

    See also:

    You then need to lodge and pay any amounts due by the date shown on your statement. If you've registered for myGov and linked your account to the ATO you will be able to lodge and pay online.

    Lodge and pay

    For other ways to pay, see Paying the ATO.

    See also:

    Last modified: 28 Jul 2017QC 45460