PAYG instalment details on the Airtax tax return

Suitable for: Individuals who earn business and/or investment income

Tax Difficulty: Easy

Time to read: 1-2 minutes

Tax Focus: Income Tax Returns

If you earned business income (maybe as a sole trader), or investment income during the financial year, you might have made PAYG instalments to prepay your potential income tax liability. 

Note: This type of PAYG involving instalments is not to be confused with the PAYG amounts that your employer might pay to the ATO each time you are paid your fortnightly/monthly salary.

An example of someone who might pay these instalments would be a sole trader who has been lodging quarterly BAS. The ATO might ask this sole trader to pay quarterly PAYG instalments if they started earning over a certain level of income, and these payments would need to be recorded at the bottom of the Airtax Tax Return ‘Personal’ page (shown below).

What is PAYG?

PAYG stands for ‘pay as you go’, and is an instalment system that allows you to prepay your income tax liability from various income sources (including sole trading) throughout the financial year. This spreads out the cash-flow burden of income tax, and can help facilitate a refundable tax position when you come to lodge your end of year tax return. You can read more about PAYG instalments and how they work, here.

What does this section mean for you?

If you did not pay any quarterly PAYG instalments relating to business or investment income, you can skip this step and proceed to the ‘Income’ page of your tax return. 

** REMINDER: do not complete this section if you only had PAYG tax withheld through an employment arrangement (e.g. when you earn a salary, and some of this is paid to the ATO, not you each month). If this is the only form of PAYG you paid during the year, you can skip this question.

If you paid PAYG instalments through BAS submissions during the financial year, you will need to complete this section to record each payment made. Given PAYG is a prepayment of income tax, our form asks you for this information first so that any income tax liability from your income (listed on the next page) can be deducted from the total of your PAYG payments. This ensures our tax calculator at the top of your form is accurate as you add further information such as deductions.

How do you complete on Airtax?

If you made PAYG instalments throughout this financial year:

You will now see a field appear for you to record the amount of PAYG paid, and which period BAS the payment was made with. You will also see an option to add more quarters. If you’re unsure of the instalments you made during the financial year, you should be able to locate this information on myGov.

Below is an example of how you would complete this section, if you paid $100 in each BAS quarter throughout the financial year:

What you’ve learned:

The PAYG section on the Personal page is relevant only if you paid quarterly PAYG instalments throughout the financial year, and allows you to account for the income tax you have already prepaid relating to these other income-earning activities.