ATO Moves Small Business to Monthly BAS Lodgement

💰 PAYG & Taxes in Australia (Simple ATO-Verified Guide)

PAYG (Pay As You Go) is the ATO system that helps you pay tax gradually during the year instead of facing a big bill at tax time.

✅ 1. Two Types of PAYG

1) PAYG Withholding — for employees

Your employer deducts tax from each pay and sends it to the ATO.

✔ Helps avoid large tax bills

✔ Often leads to refunds

2) PAYG Instalments — for businesses & ABN holders

If you earn money without tax withheld (business income, ABN work, rent, or investments), the ATO may ask you to pay quarterly instalments.

✅ 2. Why the ATO uses PAYG

To help taxpayers pay tax as income is earned, preventing:

large tax debts

missed payments

penalties

cash-flow pressure

✅ 3. How PAYG Instalments Work

The ATO sends you a quarterly notice. You pay either:

a fixed ATO-calculated amount, or

a percentage of your income you calculate yourself.

✅ 4. Do You Still Lodge a Tax Return?

Yes. PAYG is only a prepayment.

At year end:

If you paid too much → refund

If you paid too little → tax payable

✨ Summary

PAYG collects tax throughout the year.

Employees get tax withheld automatically.

Businesses/ABN holders may pay quarterly instalments.

You still lodge a tax return to finalise everything.