BAS vs PAYG Instalments: What’s the Difference?
A plain-English guide for small businesses and sole traders from S & H Accountants, Cranbourne
BAS and PAYG instalments are two of the most commonly confused terms in Australian small business tax. At S & H Accountants, a Cranbourne accounting and tax practice serving clients across south-east Melbourne, we explain it like this: the BAS is the form; PAYG instalments are one of the amounts that can go on it.
What is a BAS (Business Activity Statement)?
A Business Activity Statement (BAS) is the form businesses registered for GST lodge with the ATO, usually every quarter. It brings several tax obligations together so you report and pay them in one place. Depending on your business, a BAS can include:
- GST – the GST you collected on sales, less the GST credits on your business purchases
- PAYG withholding – tax withheld from your employees’ wages
- PAYG instalments – prepayments of your own income tax
- other items such as fuel tax credits, FBT instalments and wine equalisation tax.
You must register for GST – and therefore lodge a BAS – once your business turnover reaches $75,000 a year (or $150,000 for not-for-profits), or if you drive a taxi or rideshare vehicle.
What are PAYG instalments (PAYGI)?
PAYG instalments are regular prepayments of your income tax on business and investment income, so you are not hit with one large tax bill when your tax return is lodged. They are not an extra tax – every instalment is credited against your final income tax.
The ATO enters you into PAYG instalments based on your latest tax return. For individuals and trusts, this happens when the return shows instalment income of $4,000 or more, tax payable of $1,000 or more, and notional tax of $500 or more.
BAS vs PAYG instalments at a glance
| BAS | PAYG instalments | |
| What it is | A reporting form (activity statement) | A prepayment of income tax |
| What it covers | GST, PAYG withholding, PAYG instalments and other taxes | Your own income tax only |
| Who gets it | Businesses registered for GST | Anyone the ATO enters based on business or investment income |
| Triggered by | GST turnover of $75,000+ or voluntary GST registration | Your latest tax return |
| Is it a tax? | No – it reports taxes | No – it prepays income tax |
| If not GST-registered | No BAS | Paid via an instalment activity statement (IAS) |
| Settled at year end? | Each BAS is final for its period (GST is not reconciled in the tax return) | Yes – credited against your tax return |
How BAS and PAYG instalments work together
If you are registered for GST and in the PAYG instalment system, your PAYG instalment is simply reported on your BAS, at labels T7 (instalment amount) or T1–T2 (instalment rate). You pay one combined amount for the quarter.
Example: Raj runs a café in Cranbourne. For the September quarter his BAS shows:
| BAS item | Amount |
| GST payable (GST on sales less GST credits) | $4,200 |
| PAYG withholding from staff wages | $3,100 |
| PAYG instalment (ATO amount) | $2,500 |
| Total payable for the quarter | $9,800 |
Only the $2,500 PAYG instalment is a prepayment of Raj’s own income tax and is credited back when his tax return is lodged. The GST and wage withholding belong to the ATO and are not refunded.
If you are not registered for GST but must pay PAYG instalments – for example, a property investor with rental income – you receive an instalment activity statement (IAS) or a notice instead of a BAS.
BAS and PAYG instalment due dates
Quarterly BAS and PAYG instalments share the same due dates, which apply every financial year (1 July – 30 June):
| Quarter | Period | Standard due date |
| Q1 | 1 July – 30 September | 28 October |
| Q2 | 1 October – 31 December | 28 February (following year) |
| Q3 | 1 January – 31 March | 28 April |
| Q4 | 1 April – 30 June | 28 July |
If a due date falls on a weekend or public holiday, you can lodge and pay on the next business day. Monthly BAS lodgers are generally due on the 21st of the following month. Where we lodge electronically as your registered tax agent, later due dates may apply – we will confirm your exact dates.
Frequently asked questions
Is PAYG instalment part of BAS?
It can be. If you are registered for GST, your PAYG instalment is reported and paid on your BAS. If not, it is paid through an instalment activity statement.
Do I get my BAS payments back?
Only the PAYG instalment portion is credited against your income tax. GST and PAYG withholding are not refunded, although a BAS can produce a GST refund when your GST credits exceed the GST on sales.
Can I stop paying PAYG instalments if I lodge a BAS?
No – they are separate obligations. If your income has dropped, we can review whether to vary your instalments or ask the ATO to remove you from the system.
What is the difference between PAYG instalments and PAYG withholding?
PAYG instalments prepay your own income tax. PAYG withholding is tax you deduct from your employees’ wages and pass to the ATO. Both can appear on the same BAS.
BAS and tax help from a Cranbourne accountant
Our compliance service covers bookkeeping, BAS and IAS preparation and lodgement, PAYG withholding, PAYG instalments and tax returns – so every figure on your activity statement is checked before it goes to the ATO. Our CFO service clients also get cash-flow forecasting that sets aside GST and tax as income comes in. We also help clients set up and register companies and trusts.
Questions? Email info@sahtax.com.au or visit www.sahtax.com.au.
S & H Accountants Pty Ltd · L1, 63B High St, Cranbourne VIC 3977
This guide is general information only and does not consider your personal circumstances. Please contact us before acting on it.
