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Why is my June current Quarter’s PAYG instalment much higher than the last my previous Quarter’s?

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

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