The Pay As You Go tax instalments solution was introduced by ATO to save self-employed individuals, especially sole traders, from the challenges of having to part with a hefty amount of money during tax season.
If you are unfamiliar with this system of paying your taxes we would like to answer some common questions that most sole traders or freelancers have:
Do I have to pay PAYG taxes?
It is a solution designed by the government to help you in case your taxes are too high or too low given that you are actively earning income from your business or investment profits.
Using PAYG is not mandatory and in fact, you can also stop paying instalments once the need is over. Best practice is to consult with an accountant or ATO official before ceasing instalments.
Can I choose my instalment plans?
PAYG instalments are usually payable 28 days after the end of each financial quarter. However there are possible adjustments for special cases of entrepreneurship and small businesses.
Find out more about which tax lodgement cycle applies to you on ATO’s official website.
Can I use the PAYG solution if I am a freelance or small business owner?
ATO allows profit earning businesses to choose the PAYG as a part of the service appropriate for consolidated group taxing. But there is a maximum limit of operating employees or resources.
Please find relevant information here.
Advantages of PAYG instalments
- You are taxed according to the real time income for the respective quarter, which is a more appropriate representation of how much you need to pay.
- Your business expenses can be accumulated at the end of the year to gain maximum tax savings.
- It is a more accurate tax payment model for sole traders who do not have a secured source of uniform income.
- You don’t have to worry about missing the annual tax deadline once the tax lodgement cycle has been set up for each quarter. You will receive adequate reminders from ATO.
Not sure how to proceed with PAYG?
It can be difficult to figure out your taxes all by yourself. That’s why we are here. Even if you cannot choose PAYG now you can always lodge your taxes online with MyGigsters to avail maximum tax refunds collected from all of your business expenses.
MyGigsters Tax Hub was specifically launched to connect you with a tax expert at the earliest right after you sign up and categorise all your business expenses into a single, ready-to-lodge report which is manually reviewed by our accountant before lodging.
Please feel free to consult with our accountant about your future plans of opting for PAYG and they will guide you through the process. MyGigsters will be with you every step of the way, from tracking your year long business expenses to successfully saving your first $1000 on tax deductions!
Explore the potential of revolutionising taxes today!
