Where you earn income outside of regular employment, the ATO may require you to make instalments of your tax liability once per quarter. These instalments are known as PAYG instalments. PAYG instalments are effectively a pre-payment towards your expected tax liability for the financial year. Generally, the ATO will require you to pay PAYG instalments if you reported $4,000 or more of income outside of regular employment on your latest tax return.
The ATO will tell you if you need to start making payments under the PAYG instalment system. It is also possible to enter the PAYG instalment system voluntarily if you are expecting a large tax payable in the financial year, this can help with cash flow management. You can do this by calling the ATO on 13 28 61.
If you pay PAYG instalments, you still need to lodge an annual income tax return. If you are lodging your BAS through Airtax you can enter the PAYG instalment amount you need to pay in your Airtax lodgement. If the amount you enter is different to the ATO estimate amount included in your ATO BAS, we will contact you to confirm the correct amount for lodgement.
Before you lodge your annual income tax return, you need to:
- Pay all instalment amounts due.
- Lodge activity statements or instalment notices (if required).