• Completing the PAYG instalment labels for Option 1

    To pay the instalment amount, complete the following labels:

    To vary the instalment amount, complete the following label:

    T7 - ATO instalment amount

    If you have chosen option 1, T7 will show an amount worked out by us. If you want to pay this amount, go to 5A (PAYG income tax instalment) on your business activity statement (BAS).

    If you think that using the amount shown 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 need to fill in T8, T9 and T4.

    T8 - Estimated tax for the year

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

    If you vary your instalment amount and, as a result, pay less than 85% of your actual tax liability on your business and investment income, you may incur general interest charge (GIC). If you use the instalment amount the ATO calculated there is no risk that you will incur the GIC.

    See also:

    T9 - Varied amount payable for the quarter

    Use table 1 below to calculate the amount at T9.

    If you are an eligible primary producer or special professional who pays two instalments, use table 2 below to calculate the amount at T9.

    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 want to claim a credit at 5B - Credit from PAYG income tax instalment variation.

    Table 1: Four instalments annually

    If the instalment quarter is:

    Your varied instalment amount is:

    The first in the income year for which you need to 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 business 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 business activity statement).

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

    • use the varied instalment amount if that quarter was varied
    • subtract the amount, whether you have paid the instalment or not.

    Table 2: 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.

    T4 - Reason code for variation

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

    5A - PAYG instalment

    Copy the amount at T7 (or T9 if you're varying) to 5A on your BAS. This is the total amount of your PAYG instalment for the quarter.

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

    5B - Credit from PAYG instalment variation (optional)

    If you have 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. You can claim this at 5B.

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

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

    Even if you're entitled to a credit, you don't need to claim it in your BAS. 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.

    Next steps:

    See also:

    Lodge your BAS

    Last modified: 10 Dec 2014QC 33674