PAYG

PAYG Instalments

Pay As You Go (PAYG) Instalments is a system for paying instalments during the income year towards your expected tax liability on your business and investment income. Your actual tax liability is worked out at the end of the income year when your annual income tax return is assessed. Your PAYG instalments for the year are credited against your assessment to determine whether you owe more tax or are owed a refund.

The ATO will contact taxpayers who are required to pay PAYG instalments, notifying them of their instalment rate. This is calculated according to information in their last assessed income tax return.

PAYG instalments are generally paid quarterly, however some taxpayers have an annual instalment option. The annual instalment is a single, lump sum payment of your PAYG liability for the year. Each quarter the ATO will send you an activity statement. The due date for lodging this and paying any amounts due will be printed on the statement.

Some taxpayers pay an instalment amount calculated by the ATO, but most work out their own instalment amount based on their instalment rate multiplied by their business and investment income. The main advantage of working out your own instalment amount is that your instalments are based on your income as you earn it, instead of a projection based on your previous tax situation.

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