PAYG instalments for seasonal businesses

What are PAYG instalments?

PAYG instalments are regular prepayments of the income tax you expect to owe on business and investment income. Rather than one large bill after your tax return, you pay as the year goes — usually on the same quarterly BAS as your GST.

The idea is sensible. The difficulty for a seasonal business is that instalment dates are fixed, and they don’t care whether the quarter was your peak or your quietest stretch.

Who has to pay them?

The ATO puts you into the system based on your latest return. From its starting PAYG instalments rules:

If your income has jumped and you expect a big bill, you can also enter voluntarily to avoid a lump sum at the end of the year.

When are instalments due?

From the ATO’s PAYG instalment due dates, quarterly instalments are generally due 28 days after each quarter:

Large businesses with instalment income over $20 million pay monthly, by the 21st. Some smaller payers are on annual instalments. And eligible primary producers and special professionals using the instalment amount can pay just two instalments: 75% by 28 April and the balance by 28 July.

Amount or rate: which suits a seasonal year?

If you’re eligible for both, both appear on your activity statement or instalment notice. From the ATO’s guide to calculating your instalments:

• Instalment amount (option 1). The ATO works out a fixed amount from your last return and you pay it each quarter. The amount is indexed by a GDP adjustment factor — the ATO has set it at 5% for the 2026–27 income year.
• Instalment rate (option 2). The ATO gives you a rate, and you multiply it by the quarter’s actual instalment income (broadly, your gross business and investment income). Quiet quarter, small payment. Big quarter, big payment.

For a business with a strong peak and a long trough, that difference matters. Under the amount option, a Whitsundays charter operator pays the same instalment for the wet-season quarter as for the peak winter quarter. Under the rate option, the payment follows the takings.

The rate option does need you to calculate each quarter from your books, and a strong peak quarter produces a larger bill at once — so the tax still needs to be set aside as it’s earned.

Where do the dates bite for seasonal businesses?

Line the instalment dates up against your year:

• Snowy Mountains and Alpine Victoria ski businesses. The 28 April instalment falls before the season opens around the June long weekend. 28 October, covering the July–September season, is comfortable — if the money was kept.
• Cairns, Port Douglas and the Whitsundays. The 28 February instalment, covering October–December, lands in the wet season when trade is thinnest.
• Barossa, McLaren Vale and Riverland growers. Under South Australian payment terms, wineries can pay the last third of grape money as late as 30 September. Instalments can fall due while much of the vintage’s money is still owed to you. See the horticulture harvest cash cycle.
• Retailers. 28 February follows Christmas and is usually fine; 28 July can collide with EOFY stock clearance and quieter winter trade.

Varying your instalments

You can vary your instalments if they’re too high or too low for the year you’re actually having — a poor season, a lost contract, or a much bigger year than last.

• You make the variation on your activity statement or instalment notice, lodged on or before the instalment’s due date and before you lodge that year’s tax return.
• The varied amount or rate applies to the rest of the year, or until you vary again.
• If your varied instalments add up to less than 85% of the tax you finally owe, the ATO may charge the general interest charge on the difference, on top of the shortfall. That interest isn’t deductible from 1 July 2025.

Vary down on a realistic, documented estimate — a bad first half isn’t always a bad year, especially if your peak is still ahead.

Tactics that keep instalments manageable

1. Set aside tax on every deposit. Move a fixed share of each receipt into a separate tax account with your GST. When 28 February arrives in a quiet month, the money is already there.
2. Ask about the rate option if income swings sharply between quarters.
3. Revisit your estimate halfway through the year. Vary if the season is clearly running well above or below last year.
4. Keep your BAS on time. Lodging late and paying late compound each other.
5. Talk to the ATO early if you can’t pay an instalment in full. Options are wider before the due date than after it.

Example scenario — illustrative only. A ski-hire business in Jindabyne takes most of its revenue between June and September. On the amount option it pays four equal instalments, two of them in months when the shop is shut. After switching to the rate option on its accountant’s advice, its October instalment is larger but its February and April instalments are small, and each payment now follows actual takings.

Where does funding fit?

PAYG instalments are a timing problem, and timing problems are what working capital facilities are for:

• A business line of credit can pay an instalment on the due date and be repaid when the season returns. It’s generally for businesses trading six months or more, with limits based on turnover and bank statements.
• If tax has already built up across several quarters, a property-secured top-up of $20,000 to $1m can refinance or pay out ATO debt, secured on property you or a supporting party already own.

GST and super sit on the same calendar — see GST and BAS timing and our seasonal cash flow plan. When you’re ready, start a 60-second enquiry, or read our page on paying the ATO on time.

This guide is general information only — talk to your accountant about the right PAYG instalment option for your business.