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  • How often you lodge and pay

    Pay as you go (PAYG) instalments are generally paid quarterly. You may be able to choose to pay twice or once a year, or you may be required to make monthly PAYG instalments (you can‘t choose to pay monthly).

    When we let you know that you need to pay PAYG instalments, we'll also tell you about the options available for calculating your instalments and how often you need to lodge and pay.

    It's important you put money aside from your business and investment income to pay your instalments when they are due. If you pay on time you won't have to pay interest or penalties.

    Also make sure you lodge all your activity statements and pay all your PAYG instalments before you lodge your tax return so that your tax assessment takes into account the instalments paid throughout the year.

    On this page:

    See also:

    Quarterly instalments

    If you pay your PAYG instalments quarterly, we'll send you an activity statement or instalment notice at the end of each quarter.

    You must continue to pay quarterly unless:

    • you become eligible to pay annually
    • we require you to pay monthly.

    Choosing an option for calculating your instalments

    On your first activity statement for the year, you'll generally have a choice of two reporting options – by instalment amount or instalment rate.

    You must choose a reporting option by the due date of this activity statement. You then can't change your option until the first quarter of the next income year.

    If you haven't made a choice by the due date of your activity statement, and:

    • you paid PAYG instalments last year – you will pay using the same option you used last year
    • this is the first year you’re paying PAYG instalments – you will pay using the instalment amount (option 1) if you’re eligible.

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    When to pay

    The due dates for your quarterly instalments are set out in the table below.

    If you pay GST monthly, your due date will be the 21st of the month.

    Table 1: Due dates for quarterly instalments

    Quarter

    Period

    Due date

    1

    July–September

    28 October

    2

    October–December

    28 February

    3

    January–March

    28 April

    4

    April–June

    28 July

    If you lodge your activity statement electronically, you may be eligible to lodge two weeks later.

    You need to pay the amount shown on the statement or notice by the due date. The amount will be 25% of your PAYG instalment liability for the income year. This amount may change throughout the year after you lodge a tax return or vary your instalments.

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    Annual instalments

    Annual PAYG instalments are a single payment made towards your expected tax liability on your business and investment income for the year.

    Find out about:

    Who can pay annually

    You are eligible to pay PAYG instalments annually if, at the end of the first quarter of the income year, any of the following apply:

    • Your most recent estimated tax assessment was less than $8,000.
    • You report and pay GST annually.
    • You're a partner in a partnership that reports and pays GST annually.
    • You’re a company that is not part of an instalment group, a head company of a consolidated group or a participant in a GST joint venture.

    An instalment group is a group of companies controlled by a head company, unlike consolidated groups, which can include trusts/partnerships as well as companies.

    Choosing annual instalments

    If you're eligible to pay PAYG instalments annually, we'll let you know. You'll then need to confirm to us that you want to pay annually. If you're:

    This must be done by the date that your first quarterly PAYG instalment would be due. The date will be on the correspondence we send you. If you don’t tell us by this date, you will continue to pay quarterly instalments until the next year when your request to pay annually will take effect.

    When to pay

    When it is time to make your annual payment, we will send you an instalment notice.

    Self-preparers

    If you prepare and lodge your own tax return, you do not need to lodge the instalment notice or pay the annual instalment. You can just lodge your tax return by 31 October.

    Tax professionals

    If you use a tax agent to manage your tax affairs, you need to pay your annual instalments by 21 October.

    You'll receive credit on your tax assessment for the PAYG instalment amount you have paid for the year. To make sure you receive the correct amount of credit in your assessment, you need to pay your annual PAYG instalments before you lodge your tax return.

    However, if you lodge your tax return before paying your annual instalment:

    • simply pay the amount on your instalment notice (at field T5) by 21 October
    • don't lodge your instalment notice
    • don't vary your instalment amount as this may result in the wrong amount being credited towards your tax return

    See also:

    Two instalments

    Some primary producers and special professionals (such as sports people and authors) can pay two pay as you go (PAYG) instalments per income year.

    Find out more

    Who can pay two instalments

    You can pay two instalments if all of the following apply:

    • You are a quarterly PAYG instalment payer and pay using the instalment amount (option 1 on your activity statement).
    • You are either
      • an individual carrying on a primary production business
      • a special professional, such as an author, inventor, performing artist, production associate or sportsperson.
    • Your gross primary production income or special professional income was more than your deductions for that income on your most recent tax return. That is, your net income from that source in your most recently assessed income year was at least $1.

    If you also have a GST obligation, you may be eligible to pay GST in two instalments (see GST instalments).

    Choosing two instalments

    At the end of the first quarter of the income year, we'll send you an activity statement.

    If item T7 (ATO instalment amount) is nil and you want to pay two instalments, you don’t need to lodge the statement; just file it for your records. Once the due date for your first quarterly statement has passed, we will automatically update our records to indicate that you're a two-instalment payer.

    Once you start paying two instalments, you must continue to do this unless your circumstances change (for example, and you're no longer eligible to pay two instalments).

    When to pay

    If you're a two-instalment payer, we'll work out your instalment amounts (option 1) using information from your latest tax return. We will adjust the amounts to take into account likely growth in your business and investment income (see Calculating PAYG instalments using instalment amount (option 1).

    You'll pay 75% of your annual PAYG instalment liability by 28 April and the remainder by 28 July.

    It's important you put money aside from your business and/or investment income to pay your PAYG instalments when they are due. If you pay on time you won't have to pay interest or penalties.

    See also:

    Changing to quarterly instalments

    If you want to change from paying two instalments to pay quarterly instalments, you need to:

    • fill in the fields on your activity statement at 'instalment rate' (option 2). Once you change to quarterly instalments, you will need to work out your instalments yourself (see Calculating PAYG instalments using instalment rate (option 2))
    • lodge your activity statement by the date your first instalment would be due.

    If you don’t lodge the activity statement by the due date, you will continue to pay two instalments for the income year.

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    Monthly instalments

    Certain corporate tax entities are required to pay their PAYG instalments monthly. If you're required to pay monthly, we will notify you.

    You can't choose to pay PAYG instalments monthly.

    Find out about:

    Who needs to pay monthly instalments

    You need to make PAYG instalments monthly if the total instalment income from your most recently lodged tax return is $20 million or more, and you are a:

    • corporate tax entity (company, corporate limited partnership, corporate unit trust or public trading trust)
    • superannuation fund
    • trust
    • sole trader
    • large investor.

    If you lodge GST on a quarterly or annual basis, you'll only need to pay PAYG instalments monthly if your business and/or investment income from your most recently lodged tax return is $100 million or more.

    You can't object to paying PAYG instalments on a monthly basis.

    Monthly payer requirement test

    On the first day of each month, we conduct a monthly payer requirement (MPR) test to work out which entities must pay PAYG instalments monthly. If this applies to you, we will to let you know.

    Substituted accounting periods

    If you use a substituted accounting period (SAP), the MPR test date is the first day of the third-last month of the previous income year. For example, for a company using a SAP with an end date of 31 July, the MPR test is done on 1 May.

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    Threshold when TOFA applies

    If you apply the rules for taxation of financial arrangements (TOFA), we use an adjusted instalment income amount from your most recently lodged tax return to work out if you need to pay instalments monthly. We use the gross amount of ordinary income from TOFA transactions, not the net gain or loss amount calculated under the rules.

    If the adjusted instalment income amount is $20 million or more, you need to pay your PAYG instalments monthly. When we calculate this amount, we will advise you by 31 October.

    However, most TOFA entities will need to calculate their adjusted instalment income themselves to determine if they are required to make monthly instalments. If you are required, you need to tell us by 30 November.

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    Calculating your monthly instalment

    If you pay your PAYG instalments on a monthly basis you need to work out your instalments using:

    • the instalment rate we provide (or a varied rate if applicable)
    • your instalment income.

    There is an additional method for calculating your instalment income you may be able to use. It's designed to reduce the cost of calculating instalments on a monthly basis.

    Next steps:

    When you'll receive your activity statement

    If you need to start paying your PAYG instalments on a monthly basis but you currently receive your activity statements quarterly, you will continue to do so up to and including the final quarter of your income year.

    From the beginning of the following income year, you will start receiving your activity statements monthly.

    The change to monthly PAYG instalments will not affect your payment cycle for other obligations. For example, if you pay fringe benefits tax (FBT) instalments quarterly, you will continue to do so once you have started making monthly PAYG instalments.

    When to pay

    Monthly PAYG instalments must be reported and paid electronically. They are due on or before the 21st day of the following month. If you are a deferred business activity statement (BAS) payer, then your payment is due on the 28th day of the following month.

    It's important you put money aside from your business and investment income to pay your PAYG instalments when they are due. If you pay on time you won't have to pay interest or penalties.

    See also:

    Stopping monthly instalments

    Once you start reporting monthly, you will continue to do so until:

    • at the MPR test date your instalment income from your most recently lodged tax return is either:    
      • less than $20 million
      • less than $100 million and you are a GST quarterly or annual payer
    • you have contacted us before the start of your next income year to let us know you will stop paying monthly instalments
    • we have accepted your request to stop paying monthly instalments.

    If we accept your request to stop paying monthly instalments, you will return to your previous payment cycle (for example, quarterly) at the beginning of your next income year.

    Last modified: 26 Jul 2019QC 45463