PAYG Explained Pay as you go tax ATO

PAYG Explained

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You may be required to make pay as you go (PAYG) instalments when you earn business and investment income (gross income, excluding GST and any capital gains). Pay as you go (PAYG) instalments are regular prepayments of the expected tax on your business and investment income.

If you are an individual (including a sole trader) you will automatically enter the PAYG instalments system if you have all of the following:

  • instalment income from your latest tax return of $4,000 or more
  • tax payable on your latest notice of assessment of $1,000 or more
  • estimated (notional) tax of $500 or more.

A company or super fund will automatically enter the PAYG instalments system if any of the following apply; it:

  • has instalment income from its latest tax return of $2 million or more
  • has estimated (notional) tax of $500 or more
  • is the head company of a consolidated group.

The ATO will let you know when you have entered the PAYG instalments system.

  • If you are registered for myGov with a linked ATO account, you will receive a letter in your myGov Inbox.
  • If you have Online services for business, or Standard Business Reporting software, you will receive your instalment information 21 days before the due date.
  • If none of the above applies, you will receive a paper letter in the mail.
  • If the ATO have your mobile phone number we will also remind you via SMS.

You’ll get notified:

  • when to pay
  • how often to pay – this depends on your circumstances, but most people pay quarterly
  • how much to pay, including your options for calculating your instalments.

If you have any questions or queries regarding PAYG or any tax questions don’t hesitate to contact us at STS Accounting.