ATO – PAYG Instalments System

Whenever you lodge a Tax Return with the ATO they assess your current situation and if you meet certain criteria, they then automatically enter you into the ‘PAYG Instalments System’. This is not optional – it happens automatically.

What is the PAYG Instalment System?

This is a system the ATO have generated to try to help you avoid a large tax bill at the end of the next financial year. They estimate what your tax bill might be for the next year and they then require you to pay this in advance in quarterly instalments.

When your tax is then calculated at the end of the next financial year, these payments you have already made, are deducted from the tax amount you would owe the ATO when lodging your next Tax Return. You would then only be required to pay the balance still outstanding. Alternatively, if
your tax payable is calculated at less than the payments you have already made, you would receive a refund from the ATO.

Do not ignore this notification from the ATO

Once you have been notified by the ATO that you have entered the PAYG Instalment System, it is important that you do not ignore this as, if the instalments are not paid, they will be reflected as a debt with the ATO which could subsequently incur penalties.

Your options are as follows:

  1. Pay the quarterly instalments calculated by the ATO, by the due dates, or
  2. Vary the instalment amounts to a lesser amount or even to NIL, if you would prefer to make a lump sum payment at the end of the year, when your next Tax Return is lodged.

You can vary these instalment payments through your myGov Account linked to the ATO or, alternatively, we can assist you with this.



Lynne Linton