PAYG (pay as you go) means you pay the tax for your SMSF at the end of each quarter instead of at the end of the financial year.

After the lodgement of your first tax return, the ATO will notify you if you are required to make PAYG tax instalments. The ATO will take the total tax owed for the previous year, divide that amount by 4 and that will be the quarterly tax instalment payable by your SMSF.

We understand that it might seem like you are paying double tax, but you are not. You are simply paying tax annually for the first financial year and then quarterly from the start of the second financial year. The exact same thing happens if you have a company.

You can elect to alter the amount paid in your PAYG if you estimate paying a lot less tax moving forward, however, if you get the estimate incorrect by more than 15%, the ATO can add additional interest and charges to your SMSF for getting it wrong. If you end up paying more in tax throughout the financial year than you should have, you will receive a refund after your SMSF tax return is lodged. The ATO will amend the PAYG instalment amount each year based on your last tax return.

If you believe your current PAYG instalment amount is overestimated, please let us know and we will make completing your next tax return a priority to ensure the ATO amend the PAYG amount as soon as practical.  You can also ask us to vary the amount for you.

Please also read the “Link Your SMSF To The ATO Business Portal” blog, which will provide instructions on how to view, pay and amend your PAYG once you have made the link,