Frequency of PAYG instalments
Most taxpayers pay PAYG instalments quarterly, either 21 or 28 days after each quarter ends
(the exact date is advised by the ATO). However, PAYG instalments are payable monthly
instead of quarterly for certain large entities as follows:
From 1 January 2016 for corporate tax entities with a turnover of $20 million or more and
for all other entities in the PAYG system with a turnover of $1 billion or more.
From 1 January 2017 for all entities with a turnover of $20 million or more.
On the other hand, concessionary arrangements apply to the following taxpayers:
Those who are not carrying on a business that requires them to be registered for GST
(or are not partners in a GST-registered partnership) and whose income tax for the previous
year was assessed at less than $8,000 – may pay one annual instalment.
Primary producers, authors, artists and sports persons – may pay two instalments.
Quarterly PAYG instalments calculation methods
A quarterly PAYG instalment may be calculated using either:
The instalment income method.
The gross domestic product (GDP)-adjusted notional tax method.
All taxpayers are entitled to use the instalment income method, but access to the GDP-adjusted
notional tax method is typically confined to:
Companies and superannuation funds that recorded a business or investment income of
$2 million or less in their most recently assessed income tax return.
Instalment income method
In this method, instalments are calculated using the following formula:
Instalment income for the quarter
PAYG instalment rate