Varying your instalment amount

When to vary your instalment amount

You can vary your GST instalment amount for any quarter if you think your total instalments will be more (or less) than your GST liability for the year. This includes any wine equalisation tax or luxury car tax liability you may have. You can't vary your instalment amount to less than $0.

You don't have to vary the advised amount. When you lodge your annual GST return any amount owing to:

you will be refunded
us can be paid with a balancing payment.

How to vary your instalment amount

To vary your GST instalment amount for a quarter:

Work out your estimated annual GST liability. If you have a wine equalisation tax or luxury car tax liability include these. Enter this amount on your activity statement.
Work out your varied instalment amount for the quarter. Enter this amount on your activity statement.
Enter a reason code on your activity statement. This tells us why you've varied your instalment.

When you vary your instalment amount, the amount we print on your next activity statement will be based on your varied amount.

Table 1: Varied instalment amount for the quarter
Quarter ending	Varied instalment amount
30 September	Estimated annual GST liability × 25%
31 December	Estimated annual GST liability × 50%, less GST instalments already paid or payable for the year
31 March	Estimated annual GST liability × 75%, less GST instalments already paid or payable for the year
30 June	Estimated annual GST liability × 100%, less GST instalments already paid or payable for the year

Note: 'Estimated annual GST liability' and 'GST instalments already paid' include any wine equalisation tax or luxury car tax liabilities.

Table 2: Variation reason codes (GST instalment variations)
Code	Reason	Reason description
22	Current business structure not continuing	Your current business has stopped trading or has changed its structure. For example, you have permanently closed or sold your business, it has stopped trading because of a merger or takeover, or it has gone into bankruptcy or liquidation or been placed in the hands of a receiver/manager.
23	Significant change in trading conditions	Abnormal transactions relating to your business income or expenses will significantly affect your annual tax liability. For example, you have bought or sold a major piece of machinery or your trading conditions have been affected by local or global competition.
24	Internal business restructure	You have restructured your business. For example, it has undergone an expansion or contraction, and this will significantly affect your annual tax liability.
25	Change in legislation or product mix	A change in legislation, or in the product mix of your business, will significantly change your annual tax liability.
26	Financial market changes	Your business has been affected by domestic or foreign financial market changes. This reason code is for businesses involved in financial market trading, including those whose income is affected by changes in financial products, for example, banks, finance and insurance businesses.

Subsequent instalments

If you vary your advised instalment amount for a quarter, you'll have a varied instalment amount for each of the remaining quarters of the financial year. This varied instalment amount will be either:

25% of the estimated annual GST liability on which you based your varied instalment amount for the previous quarter (if that estimate hasn't changed)
a new varied instalment amount for the quarter if your estimated annual GST liability has changed.

Each time you vary your instalment amount you need to write your new estimated annual GST liability on your activity statement.

Example: varying instalment for an existing business

Les is a plumber who is eligible to pay GST by instalments. He chooses to pay by instalments from the September quarter.

For the September quarter Les pays the advised GST liability amount of $20,000.

By the time his December quarter instalment is due, Les estimates his GST liability for the year will be only $70,000. He decides to vary his instalment amount.

Les works out his varied instalment amount for the December quarter as follows:

Estimated annual GST liability = $70,000
Amount to be paid by December quarter ($70,000 × 50%) = $35,000
GST instalment amount already paid for September quarter = $20,000
Varied instalment amount for December quarter ($35,000 − $20,000) = $15,000.

On his December quarter activity statement Les enters:

$15,000 as his varied instalment amount
$70,000 as his estimated annual GST liability
the appropriate reason code.

For the March quarter, Les has not changed his estimated annual GST liability of $70,000. His instalment amount for the March quarter is ($70,000 × 25%) = $17,500.

For the June quarter, Les estimates that his GST liability for the year will be $73,000. He works out his varied instalment amount for the June quarter as follows:

Estimated annual GST liability = $73,000
Amount to be paid by June quarter ($73,000 × 100%) = $73,000
GST instalment amounts paid for previous quarters ($20,000 + $15,000 + $17,500) = $52,500
Varied instalment amount for June quarter ($73,000 − $52,500) = $20,500

On his June quarter activity statement, Les enters:

$20,500 as his varied instalment amount
$73,000 as his estimated annual GST liability
an appropriate reason code.

End of example

Varied instalment amount for a new business

If you're a new business and become eligible to use the instalments option part way through a financial year, you can choose to use this option when you first become eligible.

If you choose the instalments option part way through a year, you take into account any GST net amounts you paid or were refunded in earlier quarters when working out your varied instalment amount.

Example: varying instalments for a new business

Lyn is a landscape designer and registers her business for GST in July. For the September quarter she receives a net GST refund of $2,000 and for the December quarter she pays a net GST amount of $13,000.

Lyn is eligible to use the GST instalments method for the March quarter. Lyn phones us on 13 28 66 to confirm her eligibility and elects to pay GST instalments. Lyn is subsequently notified that her instalment amount for the March quarter is $13,000.

As Lyn estimates her annual GST liability to be $30,000, she decides to vary her instalment amount for the March quarter, as follows:

Estimated annual GST liability = $30,000
Amount to be paid by March quarter ($30,000 × 75%) = $22,500
The net GST amounts paid for the September and December quarters ($13,000 − $2,000) = $11,000
Varied instalment amount for March quarter ($22,500 − $11,000) = $11,500

On her March quarter activity statement, Lyn enters:

$11,500 as her varied instalment amount
$30,000 as her estimated annual GST liability
an appropriate reason code.

End of example

Penalties if your varied instalments are too low

If you vary your GST instalment amount and the total of your instalments (or the estimate you use to work out your instalment for a quarter) is less than 85% of your GST liability for the year, we may impose a penalty. You won't incur a penalty if you pay the instalment amounts advised by us.

If a penalty applies because you varied an instalment amount and it was too low, the shortfall will be reduced if you paid any extra amounts in a later quarter.

In certain circumstances we can use our discretion to reduce penalties in whole or in part. For example, if you incur a penalty but can show that your estimated annual GST liability was fair and reasonable and was incorrect only because of an unexpected upturn in sales, we may reduce the penalty.