PAYG Instalments – A Quick Rundown

As part of our commitment to keeping you informed about important developments in the world of Self-Managed Superannuation Funds (SMSFs), we’re addressing the topic of PAYG (Pay As You Go) payments in relation to SMSFs.

We understand that this area can be complex, so we’ve put together some essential information and answers to frequently asked questions.

PAYG Instalments - A Quick Rundown

What are PAYG Instalments?

PAYG Instalments, or Pay As You Go Instalments is a system for making regular payments towards the expected income tax liability of the SMSF. According to the ATO, this system facilitates the fulfilment of tax obligations by allowing the SMSF to make incremental payments each quarter, mitigating the need for a big lump-sum payment at the end of financial year when the SMSF annual tax return is lodged.

All PAYG Instalments paid over the course of the year will translate into tax credits on your SMSF’s tax return. If the PAYG Instalments haven’t covered the SMSF tax liability adequately, the remaining balance is to be paid to the ATO. Conversely, an excess in the instalment payments will lead to a credit, resulting in a refund from the ATO.
When is my SMSF required to pay PAYG Instalments?

SMSF’s are automatically entered into the PAYG Instalments System if their investment income is above the ATO’s entry thresholds in the latest lodged tax return.

How are PAYG Instalments calculated?

PAYG Instalments are calculated by the ATO based on a formula using the information from the most recent tax return lodged. Also, please note that the lodgement of subsequent tax returns will result in a change to the PAYG Instalments. The ATO will recalculate the SMSF PAYG Instalments based on the subsequent tax return lodged (most recent tax return lodged).

When are PAYG Instalments due?

PAYG Instalments are generally paid on a quarterly basis. The ATO will issue the SMSF PAYG Instalments via the Business Activity Statement (for those who lodge BAS’s) or through the Instalment Activity Statement at the end of each quarter. The due date for quarterly PAYG Instalments is generally 28 days after the end of the quarter. Please see below the ATO’s due dates for quarterly instalments (in a standard income year). As your SMSF administrators, we diligently monitor the PAYG Instalment statements provided by the ATO and ensure payment is made by the due date to avoid potential late payment interest charges or penalties from the ATO.

QuarterPeriodDue Date
1July – September28 October
2October – December28 February
3January – March28 April
4April – June28 July

Please do not hesitate to contact SMSF Admin team at [email protected] or 03 8657 7640 should you need any further information.

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