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 Tax Office will write to companies required to pay PAYG instalments, notifying them of an instalment rate, which has been calculated based on information in the companys last assessed income tax return.

PAYG instalments are generally paid quarterly. Some companies have an annual instalment option, which is a single sum paid towards your companys expected tax liability on investment and business income for the income year. For more information see the PAYG Annual Instalment Fact Sheet.

If your company is not eligible to pay an annual instalment, it will pay PAYG instalments quarterly. Each quarter the Tax Office will send you an activity statement. The due date for lodging the activity statement and paying any amounts due will be printed on your companys activity statement.

Some companies pay an instalment amount calculated by the Tax Office, but most companies 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.

For further information see the PAYG Instalments section of the ATO website.

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