• PAYG instalment option 1 labels

    The following is an example of a PAYG instalment Option 1 label

    T7
    ATO instalment amount

    If you choose option 1, T7 will show an amount worked out by us. If you want to pay this amount, copy it to 5A (PAYG income tax instalment) on your activity statement.

    If you think that using the amount will result in you paying more (or less) tax than your expected tax for the year, you can vary it. To vary your instalment amount, you must fill in T8, T9 and T4.

    T7 could also be your most recent varied amount if you have varied the instalment amount in a previous quarter in the same income year.

    In some cases, we may send you an instalment notice rather than an activity statement. If you do not wish to vary the instalment amount(s), just pay the amount shown by the due date. You do not need to lodge the notice.

    Instalment notices are:

    • quarterly PAYG instalment notice (identified by an R in the top left hand corner on a paper form)
    • quarterly GST and PAYG instalment notice (identified by a T in the top left hand corner on a paper form), and
    • annual PAYG instalment notice (identified by an N in the top left hand corner on a paper form).

    The following is an example of T8 and T9 labels

    T8
    Estimated tax for the year

    If you want to vary your PAYG instalment amount, you must first estimate the tax you expect to pay on your business and investment income for the year. Enter this figure at T8.

    T9
    Varied amount for the quarter

    Use the following Four instalments annually table to calculate the amount at T9.

    Eligible primary producers and special professionals who pay two instalments should use the Two instalments annually - eligible primary producers and special professionals table.

    If the result is a positive amount, enter it at T9. If it's a negative amount or zero, enter '0' at T9.

    If it's a negative amount, you may wish to claim a credit at 5B - Credit from PAYG income tax instalment variation.

    Four instalments annually

    If the instalment quarter is:

    Your varied instalment amount is:

    The first in the income year for which you must pay an instalment

    25% of your estimated tax from T8 for the income year.

    Your second for that income year

    50% of your estimated tax from T8 for the income year,

    less the amount of your first quarter instalment.

    Your third for that income year

    75% of your estimated tax from T8 for the income year,

    less the amount of your first and second quarter instalments,

    plus any credit you claimed for the second instalment (amounts reported at 5B on a previous activity statement).

    Your fourth for that income year

    100% of your estimated tax from T8 for the income year,

    less the amount of your first, second and third quarter instalments,

    plus any credit you claimed for the second and third instalments (amounts reported at 5B on a previous activity statement).

    If you are subtracting a previous quarter instalment as part of your calculation:

    • use the varied instalment amount if that quarter was varied, and
    • subtract the amount whether you have paid the instalment or not.
    Two instalments annually - eligible primary producers and special professionals

    If the instalment is due in:

    Your varied instalment amount is:

    April

    75% of your estimated tax for the income year.

    July

    100% of your estimated tax from the income year, less the amount of your April instalment.

    If we first notify you of an instalment rate during the second, third or fourth quarters of the income year and you choose to vary your instalment amount, you will need to exclude the earlier quarters when you work out your varied instalment amount. This will result in a lesser amount. Refer to How to vary the amount you pay for further information.

    T4
    Reason code for variation

    If you've varied your PAYG instalment amount, you must tell us why. Choose the reason from the table below that best describes why and enter the corresponding code at T4.

    Choose a reason code that matches your reason for varying your instalment rate to enter at T4

    Reason

    Code

    Change in investments

    21

    Current business structure not continuing

    22

    Significant change in trading conditions

    23

    Internal business restructure

    24

    Change in legislation or product mix

    25

    Financial market changes

    26

    Use of income tax losses

    27

    Consolidations

    33

    The following image is an example of Section 5A label

    5A
    PAYG income tax instalment

    Enter the amount at T7 (or T9 if you are varying) to 5A on your activity statement. This is the total amount of your PAYG instalment for the quarter.

    If your only obligation is PAYG instalments, you can enter '0' at 5A if your instalment amount for the period covered by the activity statement is $50 or less.

    The following image is an example of Section 5B label

    5B
    Credit from PAYG income tax instalment variation

    If you decided to vary your instalment amount and the amount of the instalment worked out at T9 is negative, you may be entitled to a credit from earlier instalments for the same income year.

    We offset this credit against other liabilities on your activity statement. We include it in your net obligations amount at 9 in the 'Payment or refund?' section of your activity statement.

    If the instalment you are varying is your first for the income year, you can't claim a credit.

    Even if you are entitled to a credit, you don't have to claim it in your activity statement. If your total instalments for the year are more than the tax on your business and investment income, we will credit you with the overpayment when we assess your annual income tax return.

    To claim a credit where the amount worked out at T9 is negative, copy the amount at T9 to 5B.

    If you think you may be entitled to a credit and wish to claim it on your activity statement, refer to How to vary the amount you pay.

      Last modified: 22 Feb 2017QC 27149