Question

IRAC/ILAC for annexure A

PAYG Installment is an amount set aside to be used to pay tax liabilities.

Answer 1

Your instalment income is all the ordinary income you earned from your business and investment activities for the quarter (excluding GST). Make sure you include your gross income (not your net income, taxable income or income reduced by any deductions). Instalment income includes: gross rent.

Pay as you go (PAYG) instalments help you do this. By making regular payments (instalments) throughout the year you won't have to pay a large tax bill when you lodge your tax return.

Pay As You Go (PAYG) Instalments is a system for paying instalments during the income year towards an entity's or individual's expected tax liability on business and investment income. The actual tax liability is worked out at the end of the income year when the annual income tax return is assessed.

Individuals

PAYG instalments for individuals are generally paid quarterly. Where the most recent annual tax liability on business and investment income is less than $8,000 and certain other conditions are met, individuals can choose to pay an annual instalment

Partnerships and trusts

Partnerships and trusts are generally not required to pay PAYG instalments. However, special rules apply to partners and beneficiaries when calculating their own PAYG instalments.

Companies
Corporate tax entities with annual turnover above a threshold are required to pay monthly PAYG instalments. Companies can choose to pay an annual instalment if they meet the criteria that apply to individuals noted above, plus some additional conditions.