Many small business owners pay more than they need to in Pay As You Go (PAYG) tax instalments—without realising they have the option to adjust them. If your business income has changed since your last tax return, you may be able to reduce your payments, claim a credit, or adjust your instalments before the financial year ends.

Taking control of your PAYG instalments ensures that you are paying the right amount at the right time, keeping more cash in your business when you need it most.

What is PAYG and Why Does It Matter?

PAYG instalments are prepaid amounts towards your expected tax bill, calculated by the Australian Taxation Office (ATO) based on your last tax return. While this helps businesses manage their tax obligations, it does not always reflect your actual financial position.

If your business earnings fluctuate, you may be overpaying and tying up cash unnecessarily, or underpaying and risking a surprise tax bill later. Regularly reviewing your PAYG instalments can help keep your finances on track.

When Should You Adjust Your PAYG Instalments?

It’s a good idea to review your PAYG instalments if your business has experienced:

• A slower-than-expected period, leading to lower taxable income
• Higher-than-expected earnings, requiring a top-up to avoid a large tax bill later
• Large deductible expenses, such as new equipment purchases or business investments
• Changes in business structure or operations, affecting overall revenue

By adjusting your PAYG instalments, you can ensure your tax payments align with your actual income—avoiding overpayments while staying compliant.

What Are Your Options?

If your instalments don’t match your earnings, you may be able to:

• Vary the amount you pay so it better reflects your business’s current financial situation
• Claim a credit if you’ve already overpaid, reducing your tax bill or securing a refund

The ATO provides online tools to help businesses make adjustments, but if you’re unsure whether you should make a change, speaking with an accountant is the best way to ensure you’re making the right decision.

Need Help Managing Your PAYG Instalments?

Adjusting PAYG instalments is a simple but powerful way to manage cash flow, but knowing when and how to do it can be tricky. At Kaleidoscope Accounting, we help business owners optimise their tax strategy and make sure they’re only paying what’s necessary.

Let’s get your PAYG instalments right. Contact us today at 0417 859 700, or email rebecca@kaleidoscopeaccounting.com.au.