How is PAYG calculated?
Three Methods are used to calculate PAYG instalments. 1) If you are paying quarterly – Instalment income x Instalment rate. 2) If you are paying annually – Notional tax method amount from business and investment income in the previous year and which is advised by the ATO. 3) If you MUST pay quarterly, you are not in business and your tax is greater than $8,000 – Notional tax with GDP adjustment. Tip. The main advantage of using the instalment rate multiplied by the instalment income formula is that your PAYG instalments are based on your actual income earned. The main advantage of the two notional tax methods is that you do not need to work out your instalment amount, the ATO will work it out for you.
