Pay as you go (PAYG) is a withholding tax which requires you to pay incremental amounts which accumulate towards your expected end of year income tax liability.
PAYG instalments. Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability. It only applies to you if you earn business and/or investment income over a certain amount.
Generally, for individuals and trusts you will need to pay instalments if you reported $4,000 or more ($1 or more if you're not a resident) of gross business and/or investment income in your latest tax return, unless one of the following applies:
the tax payable on your latest notice of assessment is less than $1,000
your notional tax is less than $500
you are entitled to the seniors and pensioners tax offset.
If you're a company or super fund, you'll generally need to pay instalments if either:
the instalment rate we calculate is more than 0% and your notional tax is $500 or more
the instalment income included in your most recent income tax assessment is $2 million or more
you're the head of a consolidated group.
Notional tax is an estimate of the tax payable for the financial year, excluding capital gains tax. If you are superannuation fund or self-managed super fund, capital gains are generally included in this calculation.
Special rules apply to PAYG instalments for partnerships, trusts, companies, primary producers and consolidated groups.