PAYG (Pay As You Go) instalments are a tax payment in advance.
Instead of paying a large tax bill at the end of the financial year, SMSFs can make regular prepayments each quarter to spread their tax liability over time.
How PAYG Instalments Work
When an SMSF's income reaches certain thresholds, the Australian Taxation Office (ATO) may automatically enter the fund into the PAYG instalments system. For SMSFs, this typically occurs when:
The SMSF's income from the last tax return is $4,000 or more
The tax payable on the latest notice of assessment is $1,000 or more
The estimated (notional) tax is $500 or more
Once automatically enrolled, the SMSF will receive activity statements or instalment notices showing the amount to be paid.
Quarterly vs Annual PAYG Instalments
Quarterly Instalments
By default, most SMSFs are required to pay PAYG instalments every quarter. These payments are due:
Quarter | Period | Due Date |
1 | July–September | 28 October |
2 | October–December | 28 February |
3 | January–March | 28 April |
4 | April–June | 28 July |
Annual Instalments
At Grow SMSF, we understand that managing quarterly payments can be cumbersome. Wherever possible, we enrol our SMSF customers onto annual PAYG instalments for simplicity.
SMSFs may be eligible to pay PAYG instalments annually if the assessment instalment income is less than $8,000 for the latest year.
Annual instalments are typically due on 21 October, for example the annual PAYG Instalment for the 2024/25 financial year is 21 October 2025.
Grow SMSF's Approach
Remember, whether you're on quarterly or annual instalments, it's your responsibility as trustee of your SMSF to budget appropriately to ensure you can meet your tax obligations when they fall due.
If you have any questions about PAYG instalments or your SMSF's tax arrangements, don't hesitate to contact our team at Grow SMSF.
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