With Pay As You Go (PAYG) Instalments, you make regular tax payments throughout the year. The reason this system was introduced is to help you avoid a large tax bill when you lodge your Income Tax Return. The amount that you pay per quarter using PAYG Instalments is predetermined by the ATO.

However, if you think that you will pay too much tax compared to your estimated tax for the year, you can opt to vary your PAYG instalments.

With Covid-19 affecting many businesses and individuals alike, the ATO is recognising the financial strain placed upon them. Therefore they are not applying any penalties or interest for any excessive variations for the 2021-22 income year.

This will apply when you have taken reasonable care to estimate your end of year tax. When considering if a genuine attempt has been made, the ATO takes into account what a reasonable person would have done in the same circumstances as you.

Variations do not carry over into the new income year. If you made variations in the 2020-21 income year, you may need to vary again in 2021-22. You can vary your instalments multiple times throughout the year. Your varied amount or rate will apply for all your remaining instalments for the income year, or until you make another variation.

If you realise that you have made a mistake working out your PAYG instalment, you can correct it by lodging a revised activity statement or varying a subsequent instalment.

And remember, we can always help you with these variations as well.