If you have business income or investment income, then you either have or will have been required to pay quarterly tax instalments. The following is a summary of how the Pay As You Go (PAYG) system operates.

• Pay-as-you-go (PAYG) instalments are a way for individuals and businesses to pay their income tax on a regular basis, rather than as a lump sum at the end of the financial year.
• The instalments are based on the individual’s or business’s estimated income for the current financial year, and are paid at regular intervals (usually quarterly) throughout the year.
• PAYG instalments can be used by individuals who are self-employed, or by businesses that are not required to withhold tax from their employees’ salaries.
• The Australian Taxation Office (ATO) calculates the instalments based on the individual’s or business’s income tax liability for the previous financial year, and will adjust the instalments as necessary during the year if the individual’s or business’s income changes.
• Failure to make the required PAYG instalments on time can result in fines and penalties from the ATO.
• If an individual or business overpays their PAYG instalments, they will receive a credit towards their income tax liability for the current financial year or receive a refund.

If your income changes from year to year you can vary the quarterly instalment down. However the variation MUST be lodged before the due date of payment. Once the due date is passed, there is no scope to vary the instalment. Please contact us to find out how working with us will have a positive impact upon your business.