Pay As You Go Instalments (PAYGI) – EXPLAINED!


Pay As You Go Instalments (PAYGI) – EXPLAINED!

Posted on February 15, 2021 by admin

Each quarter, we receive lots of questions regarding PAYG Instalments… what are they and how are they calculated?

Pay As You Go Instalments are used to “prepay” future income tax liabilities. The ATO issues PAYG Instalments for companies and individuals that had a tax liability in the previous financial year.

For both companies and individuals, Insight Tax Partners calculates the appropriate PAYG Instalment each quarter to ensure you are meeting your ATO requirements. We calculate the amount by forecasting annual profit based on YTD numbers.

The ATO has issued several cautions regarding PAYG Instalment calculations. The total PAYG Instalments paid by the end of the financial year must be greater than or equal to 85% of the tax liability (individual or company income tax). If you are found to have varied your instalments too low, you could be charged both penalties and general interest.

Although PAYG Instalments might appear painful in the first instance, they are used to prepay your annual tax liabilities, meaning you won’t end up with a large lump sum to pay at the end of the financial year.

If you have any further questions, please don’t hesitate to contact us.

 

Insight Tax Partners

+ 61 2 9181 3431

  • Level 10
    60 York Street
    Sydney NSW 2000

  • 333 Collins Street,
    Melbourne VIC 3000

What’s New?
Sign up to our Newsletter