The PAYG Instalment amount is reassessed by the ATO every time you lodge your tax return. Therefore, if you have higher business/investment income in your recent tax return lodged in the period March to June, the ATO will readjust the instalment amount required and as a result you may find that the ATO asks for a higher amount for the June Quarter PAYG instalment.
This is to ensure that you will have already paid your estimated tax liability on your business/investment income before your lodge your tax return, to avoid a big tax bill “shock”.
For example, if your total tax paid in the previous financial year was $8,000, but you have only been paying quarterly instalments based on the year before (say $2,000), then the ATO change the amount for the June Quarter to be a top-up on that quarter for the whole year.
The quarters for the year to 30 June already paid may have been:
| September Quarter | $500.00 |
| December Quarter | $500.00 |
| March Quarter | $500.00 |
| Total | $1,500.00 |
Based on the tax assessment notice (which was issued in June quarter, before the June PAYG Instalment was released), then the ATO seeks a total PAYG of $8,000 for the year. That means that the last instalments for June becomes:
| Total PAYG for Year | $8,000.00 |
| Less Paid for the first 3 quarters | $1,500.00 |
| Total PAYG for June Quarter | $6,500.00 |
