When you first enter PAYG instalments, we will send you a letter by post or through myGov. It will tell you how often you need to lodge and pay:
- Most taxpayers pay quarterly instalments.
- Depending on your circumstances, the letter may offer you the option to pay 2 instalments per year or one annual instalment.
- Businesses with instalment income of more than $20 million are required to lodge and pay their PAYG instalments monthly.
The due date for your next PAYG instalment will be on your activity statement or instalment notice.
Make sure you lodge all your activity statements and pay your instalments before you lodge your tax return. The instalments you pay throughout the year will then be taken into account in your tax assessment.
We will issue your activity statement or instalment notice at the end of each quarter. It will show the due date.
If you receive an activity statement and:
- lodge online, you may be eligible to lodge and pay 2 weeks later than the usual due dates
- pay GST monthly, your due date is the 21st of each month. You are not eligible for the 2-week extension for lodging electronically.
If you receive an instalment notice and pay the instalment amount shown on the notice, you don't need to lodge it – just pay the instalment amount by the due date.
You need to pay:
- 75% of your total yearly PAYG instalments by 28 April
- the remainder by 28 July.
You must pay using the instalment amount if you are a 2-instalment payer.
Your instalment amounts will be shown on your activity statement. We work out your instalment amounts using information from your latest tax return.
You are eligible to pay in 2 instalments if both the following apply:
- You are a quarterly PAYG instalment payer and pay using the instalment amount.
- 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.
We will offer you the choice of paying by 2 instalments if your most recent tax return showed that your gross primary production income or special professional income was more than your deductions from these sources of income.
If you also have a GST obligation, you may be eligible to pay GST in 2 instalments.
Changing to quarterly instalments
You can change your instalments:
To change from paying 2 instalments to paying quarterly instalments, you need to:
- lodge your activity statement by the date your first instalment would be due
- change your activity statement to using the instalment rate and work out your instalments yourself using this rate.
If you don't lodge your activity statement by the due date of the first instalment, you will continue to pay 2 instalments for the income year.
When lodging your tax return, if you no longer meet the threshold to pay instalments annually you will receive a letter with your new instalment details. If the letter is issued in the income year where you are paying annually, it will:
- display your new estimated (notional) tax
- show that you're still eligible to make annual payments instead of quarterly for this year
- provide information about your new payments under the heading ‘What happens next’.
To confirm your details, check your ATO online services account or create an account.
Example: from annual to quarterly instalments
John lodged his 2021 tax return on 25 October 2021. At the time of lodgment, John paid his PAYG instalments annually.
John receives a letter to advise that his PAYG instalments have changed based on the business and investment income he reported in his 2021 tax return.
The letter shows his estimated (notional) tax as $26,000 and that he continues to pay by annual instalments. This is because John was paying his PAYG instalment by an annual instalment at the time the letter issued.
John will change to quarterly instalments at the start of the next income year – from 1 July 2022.End of example
We will send you an instalment notice when it is time to make your annual payment.
If you prepare and lodge your own tax return:
- you don't need to lodge the instalment notice or pay the annual instalment
- simply lodge your tax return by 31 October.
If you use a tax agent
If you lodge your tax return through a tax agent, you need to:
- pay your annual instalment by 21 October
- ensure you pay your annual instalment before your tax return is lodged.
It is important to pay your annual instalment before lodging your return so we can credit the correct amount in your income tax assessment.
However, if your tax agent lodges your return before 21 October:
- you should pay the amount on your PAYG instalment notice by 21 October
- don't lodge the instalment notice or vary your instalment amount.
How to choose to pay annually
We will let you know if you are eligible to pay an annual PAYG instalment.
If you are an individual taxpayer (including if you are in business as a sole trader), you can confirm that you want to pay annually through your myGov account linked to the ATO.Sign in to myGov
If you want to pay annually, you must confirm your choice by the date that your first quarterly instalment is due. Otherwise you will continue to pay quarterly instalments until the next year.
Tax professionals can use the annual PAYG instalment form (for up to 20 of your clients at a time) in Online services for agents.
You are eligible to pay PAYG instalments annually if, at the end of the first quarter of the income year, all of the following apply:
- Your most recent estimated (notional) tax notified by us was less than $8,000.
- You either
- are not required to be registered for GST as either an individual or a partner in a partnership, or
- voluntarily registered for GST and have chosen to remit GST annually, either as an individual or a partner in a partnership.
- You are not a company that is part of an instalment group, a head company of a consolidated group or a participant in a GST joint venture.