Varying PAYG installments
If you worked under ABN and your tax returns for the previous years generated tax payable amounts, the ATO would have arranged for a Pay As You Go (PAYG) quarterly installment payment plan for you. This payment plan will be based on a projection of your ABN income for the financial year, referring to your latest tax return.
The purpose of the PAYG installment payment plan is to better prepare ABN taxpayers for their upcoming tax returns. The plan will help lower their total tax payable amount at the end of the financial year or potentially create a tax refund instead if the actual ABN income is less than the ATO projected ABN income.
If you are a PAYG installment payer, we encourage you to review your tax position regularly throughout the year. You can vary your PAYG installments on your activity statement if your situation changed such as if you have been affected by COVID-19.
If your situation changed, you can potentially vary the PAYG installment and lower it down to zero. You can also request for a credit to offset any previous PAYG installment amount processed which occurred after your changed business situation.
The ATO will not apply penalties or charge interests too varied installments that relate to the 2020–21 income year when you have made your best attempt to estimate your end of year tax liability.
Setting up ATO payment plans
If you have a pending tax payable amount, you can set up a payment plan with the ATO through your tax agent to pay it in installments.
The maximum number of installments allowed would be 22 monthly installments. To arrange for an installment, the ATO would require you to pay at least 10% within 7 days of the date of the arrangement.
Individuals with a payment plan in place can suspend, vary or cancel their payment plan. If they are affected by Covid-19, they can arrange with the ATO so that no interest will be charged on their outstanding debt.
The ATO will also consider remitting interest and penalties incurred after 23 January 2020.
If the interest or penalties were incurred before 23 January 2020, you can still request for these amounts to be remitted so that the ATO can:
- Consider whether your circumstances before 23 January 2020 would make a remission of interest or penalties appropriate
- Arrange to stop interest being charged while you are affected by Covid-19, and for the duration of a payment plan in you put one in place.
If you would like for us to help you vary your PAYG installments or set up your tax payable payment plan with the ATO, please do not hesitate to contact us at firstname.lastname@example.org