Taxation Administration Act 1953

SCHEDULE 1 - COLLECTION AND RECOVERY OF INCOME TAX AND OTHER LIABILITIES  

Note: See section 3AA .

Chapter 2 - Collection, recovery and administration of income tax  

PART 2-1 - INTRODUCTION TO THE PAY AS YOU GO (PAYG) SYSTEM  

Division 6 - Guide to Parts 2-5 and 2-10  

SECTION 6-5   THE PAY AS YOU GO (PAYG) SYSTEM  

6-5(1)    
Parts 2-5 and 2-10 establish the PAYG system, which has 2 components:

• PAYG withholding (Part 2-5 )

• PAYG instalments (Part 2-10 ).

PAYG withholding

6-5(2)    
Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner.

For a list of the payments and other transactions to which PAYG withholding applies, see Division 10 .

PAYG instalments

6-5(3)    

You pay PAYG instalments directly to the Commissioner. These are usually based on your GDP-adjusted notional tax or your ordinary income for a past period, but excluding:

• income subject to PAYG withholding (with certain exceptions)

• exempt income, or income that is otherwise not assessable.

An instalment is usually paid after a quarter, but some taxpayers are eligible to pay an annual instalment after the end of the income year.