What are PAYG Instalments?

If you are a company, run business or have non salary income (like investment income), you may have come across what is called Pay-As-You-Go Instalments, better known by the shortened name, PAYG Instalments. This is a system that has been put into place by the ATO that creates quarterly, sometimes monthly, payments that is put towards your estimated annual tax liability. This system is only put into place, in the case of an individual, should your business or company make over a certain amount. Companies do not have a tax free threshold so tax applies on any income.  The ATO will contact you should this become a requirement of your business. You can also opt to enter into this system early should you see the benefit of this for your business.

PAYG instalments are estimated based on your most recent year’s tax return. By paying a partial amount each quarter, you are then lowering the lump sum that you or your company will be liable for at the end of the financial year.

It is important to know that if your circumstances should change throughout the year, that there are options available to you to vary the amount you are due each quarter. For further information on this, please refer to the ATO website, or your accountant.

Please take special note that there are due dates involved with having PAYG instalments. We have provided a table for your convenience to look at the dates in which your payments will be due if you choose to do the PAYG yourself:

 

Closing Quarter Month Due Date
March April 28th
June July 28th
September October 28th
December February 28th

 

Should you choose to have this completed by a tax agent, you do benefit from having an extended due date. Here are the following dates for tax agents:

Closing Quarter Month Due Date
March May 25th
June August 25th
September November 25th
December February 28th