John Jevi dela CruzPAYG instalments are easy to miss because they do not apply only to businesses. Sole traders, companies and some investors can all enter the system. For many quarterly payers, the July-to-September amount is due on 28 October 2026, so October is the right time to check both the amount and the due date.
The ATO uses PAYG instalments as prepayments towards expected income tax on business and investment income. You can read the ATO guidance on instalment payments for the official rules. They can apply to income such as business profits, interest, dividends, rent and royalties. The payments are later credited against your final income tax liability.
If you are also managing other October obligations, review HarvestWise Accounting’s 31 October tax deadline guide so you do not confuse one due date with another.
Why PAYG Instalments Matter Before 28 October
Quarterly PAYG instalments are generally due 28 days after the end of each quarter. For the July-to-September quarter, the standard date is 28 October.
Your own due date can differ depending on your reporting arrangements, so always check the activity statement or instalment notice issued to you.
The timing matters for more than cash flow. Late payment can attract the general interest charge. If an activity statement also needs to be lodged, a separate failure-to-lodge penalty may apply depending on the circumstances.
If your PAYG obligation appears on a BAS, HarvestWise Accounting’s activity statement due dates guide explains the main monthly and quarterly reporting cycles.
1. Assuming These Payments Are Only for Businesses
You may receive a PAYG instalment notice even if you do not run a traditional business.
The system can also apply to individuals with investment income. Examples can include:
- bank interest
- dividends
- rental income
- royalties
- business income
A salaried employee can therefore enter the system even when an employer already withholds tax from wages.
Check your ATO correspondence instead of ignoring an instalment notice because you do not consider yourself a business owner.
If investment income caused the notice, compare the instalment with what you now expect to earn during the current financial year.
2. Missing the 28 October PAYG Instalments Deadline
For quarterly payers, July to September is the first quarter of the 2026–27 financial year. The standard PAYG instalment deadline is 28 October.
Do not confuse this date with other October tax obligations.
For example, a September monthly activity statement generally has an earlier due date. The individual tax return timetable is also a separate obligation.
The safest approach is to check the date shown on your own activity statement or instalment notice.
If you cannot pay the full amount, do not automatically leave a required statement unlodged. Lodgement and payment are separate issues.
Lodging the required statement on time may help prevent an avoidable lodgement problem while the payment position is dealt with separately.
3. Ignoring the New 5 Percent GDP Adjustment
Your 2026–27 instalment may look higher even when your income has not increased by the same amount.
For 2026–27, the ATO’s GDP adjustment guidance confirms a 5% adjustment for relevant quarterly calculations.
Some taxpayers using substituted accounting periods can have different treatment.
The 5% adjustment does not mean the ATO has determined that your actual profit will increase by exactly 5%. It forms part of the calculation used to update certain instalment amounts.
Before assuming the amount is wrong, check which calculation method applies to you.
4. Varying PAYG Instalments Too Aggressively
You may be able to vary PAYG instalments when the ATO amount no longer reflects your expected tax position.
This can happen when:
- business profits fall
- rental income changes
- investment income falls
- deductible costs increase
- trading conditions change materially
However, reducing an instalment too far can create another cost.
The ATO provides official guidance on instalment calculations and variations and the risks of underestimating your expected tax position.
Use current records before changing an instalment.
Review your expected income, deductible expenses and likely full-year tax position. Do not reduce the amount solely because cash is tight this month.
5. Waiting Until After the Due Date to Vary
A valid reason to vary an instalment does not mean it can be changed at any time.
Variations generally need to be made through the relevant activity statement or instalment notice by the applicable due date.
For a 28 October obligation, review your figures before that date. Do not wait until the amount has already become overdue.
Start with your current profit and loss information, investment income and expected result for the rest of the financial year.
If your records are incomplete, HarvestWise Accounting’s tax record preparation checklist can help identify the documents you still need.
6. Confusing Instalments With PAYG Withholding
The names sound similar, but PAYG instalments and PAYG withholding perform different functions.
PAYG withholding generally involves tax withheld from payments such as employee wages. The payer then reports and pays that tax to the ATO.
PAYG instalments are prepayments towards your own expected income tax on business and investment income.
A sole trader with employees can therefore deal with both systems at the same time. A company may also deal with both.
Do not combine the amounts simply because they can appear on the same activity statement. Check each label separately.
7. Refusing to Lodge Because You Cannot Pay
A cash-flow problem does not automatically remove a lodgement obligation.
If you cannot pay the full amount, lodge the required statement by its due date where possible and deal with the payment issue separately.
Leaving both the statement and the payment unresolved can make the position worse.
Late lodgement can create penalty exposure, while unpaid amounts can continue attracting interest.
Early action gives you more options. A shortfall identified well before 28 October is easier to manage than one discovered on the deadline itself.
PAYG Instalments Checklist Before 28 October
Use this checklist before the first-quarter deadline:
- Confirm whether the ATO has placed you in the PAYG instalment system.
- Check the due date shown on your activity statement or instalment notice.
- Identify whether you use the instalment amount or instalment rate method.
- Compare the ATO figure with your current business and investment income.
- Check whether the 5% GDP adjustment explains an increase.
- Support any variation with current records and a reasonable full-year estimate.
- Do not vary only to solve a short-term cash-flow problem.
- Lodge any required statement on time even if payment is difficult.
- Keep the working papers that support any variation.
Records to Review Before You Vary PAYG Instalments
Before changing a PAYG instalment, gather enough information to support your estimate.
For a sole trader or business owner, review:
- your current profit and loss report
- bank reconciliations
- major changes in expenses
- expected income for the remainder of the year
- new or discontinued contracts
- major asset purchases
- unusual one-off income
For an investor, review:
- interest
- dividends
- rental income
- managed fund distributions
- royalties
- other investment income
- related deductions where relevant
You do not need a perfect forecast. You do need a reasonable estimate that you can explain and support.
How HarvestWise Accounting Can Help
HarvestWise Accounting can help review PAYG instalments and compare them with your current tax position.
We can also help check the figures used in your activity statement and identify missing records before the due date.
If your first-quarter amount looks wrong or you are considering a variation, get in touch with the HarvestWise team before 28 October.
That gives you more time to review the numbers properly before the deadline.
Disclaimer
General information only. PAYG instalments, variation rules and due dates depend on your circumstances and ATO records. Speak to a registered tax professional for advice before varying an instalment or acting on a deadline.