Checking that your pay as you go instalments (PAYG) still reflect your expected end of year tax liability is a good idea.
PAYG instalments can be varied multiple times throughout the year, with the varied amount or rate applying to the remaining instalments for the income year, or until another variation is made.
PAYG instalments can also be varied if COVID-19 continues to affect you or your business.
By making these regular payments throughout the year, you’ll avoid having to pay a large tax bill when you lodge the tax return and allow you to plan ahead for your income tax to maintain a healthy cash flow.
These voluntary PAYG payments are made based on your business and/or investment income, which is also known as instalment income. When the tax return is lodged, all the amounts that have been paid throughout the year will be offset against any tax owed from the year.
These payments are different from PAYG withholding, where tax is collected by employers from the payments that they make to employees and contractors, and sent to the ATO.