SMSF PAYG instalments explained

If your SMSF earns income, it may need to pay PAYG instalments during the year.

PAYG stands for pay-as-you-go. It’s a way of paying tax throughout the financial year, rather than facing one larger tax bill after your SMSF annual return is lodged.

How do PAYG instalments work?

Your SMSF’s final tax position is worked out at the end of the financial year as part of its annual return.

Any PAYG instalments paid during the year count towards the fund’s final tax bill.

That means your SMSF may:

• Pay extra tax if the instalments were too low

• Receive a refund if the instalments were too high

• Have nothing further to pay if the instalments match the final tax amount

PAYG instalment calculations 

The ATO usually calculates instalments based on your SMSF’s most recent tax assessment.

For example, if an SMSF had a A$12,000 tax bill last year, the ATO may estimate quarterly PAYG payments of A$3,000 over the following year.

If your SMSF earns more or less income this year, the final amount payable may change accordingly after the annual return is lodged.

Does PAYG apply in the first year?

Generally, SMSFs don’t pay PAYG instalments in their first year.

Instead, the fund’s tax is calculated when the first annual return is lodged. After that, the SMSF may be added to the PAYG instalment system.

Can PAYG instalments be varied?

Yes, PAYG instalments can sometimes change if your SMSF’s expected tax position shifts.

This might happen if the fund’s income, investments or member circumstances have changed.

However, underestimating PAYG instalments may lead to penalties and a larger tax bill later. It’s important to be careful.

PAYG instalment due dates

PAYG instalments are generally paid quarterly.

How Stake Super manages PAYG instalments

For Stake Super customers, PAYG instalments are managed as part of your SMSF admin package.

We track upcoming activity statements, lodge them on your behalf and arrange PAYG payments to the ATO before they’re due.

You’ll just need to make sure there is enough money in your AUD account to cover the payment.

What if I receive a PAYG activity statement?

If you’re a Stake Super customer, you may still receive PAYG activity statements from the ATO by mail or through myGov.

You don’t need to lodge these yourself. Stake Super will handle the lodgement and payment process for your SMSF.

PAYG instalments vs PAYG withholding

PAYG instalments are payments your SMSF makes towards its own income tax.

PAYG withholding is different. It refers to tax that may need to be withheld from certain benefit payments to members, depending on their age, tax status and circumstances.

Reduce your SMSF admin

Stake Super helps with SMSF tax admin, including PAYG activity statements, annual accounts and tax return lodgement.

Get started online or speak to a Stake Super specialist.

Stake does not provide personal tax advice. Consider speaking with a qualified tax professional about your circumstances.

Ciara Conway

Commercial Manager - Stake Super

Ciara is a Commercial Manager at Stake Super, with over 10 years of experience in the SMSF industry and an MA in Accountancy and Finance from Heriot-Watt University in Edinburgh, United Kingdom. Having previously worked at a chartered accounting firm and one of the largest SMSF administrators in Australia, Ciara has extensive knowledge of SMSF compliance. She is also a current member of the SMSF Association.