BAS & PAYG for sole traders

A Business Activity Statement (BAS) is a form you submit to the ATO each quarter if you are registered for GST, summarising:

• The total earnings for your business over the quarter

• The GST you charged to clients over the quarter

• The GST you paid on business expenses over the quarter

• Your quarterly PAYG instalment

• If you have employees, your PAYG-w instalment

The ATO will automatically notify you when your BAS is due each quarter, once you have registered your business for GST and received an ABN. They’ll provide confirmation once it’s been received.

See BAS due dates here. 

How do I estimate BAS?

The ATO will send you a form in your MyGov account inbox that asks for three pieces of information:

• The total earnings for your business over the quarter (line G1)

• The GST charged to clients over the quarter (line 1A)

• The GST you paid on business expenses over the quarter (line 1B

Pro-Tip: If you’re a Rounded user, just check the “Activity Statement” section of your reports. We automatically track GST and calculate these 3 figures for you, so all you need to do is copy them into the ATO form. 

Pay-As-You-Go (PAYG) instalments are the ATO’s method of collecting quarterly income tax payments, so you don’t have to make a huge tax payment in your annual tax return.

You’ll pay PAYG instalments quarterly, and if you’re registered for GST, your PAYG instalments will be included within your BAS.

The ATO will provide an estimate for how much you owe and will either send you an instalment notice or include the PAYG instalment amount within your quarterly BAS.

PAYG withholdings are only relevant if you have employees. If you do pay employees, you are required to withhold a certain amount of tax from their pay, which you will then send to the ATO.

Who has to submit PAYG instalments?

If you expect to earn more than $4,000 in business income over the course of a tax year, and you had business income tax payable from the year prior, you’ll most likely be required to make PAYG instalments. 

Alternatively, you can register to make voluntary PAYG-I instalments.

How will I know how much to pay each quarter?

The ATO starts sending PAYG activity statements to eligible people following the end of the financial year (June 30th), or after the most recent income tax return lodgement that returns an amount of income tax payable above $1,000.

The tax office will use your most recent tax filing information to estimate your first payment, which can be a bit tricky if you’ve recently transitioned out of full-time work into freelancing.

Fortunately, you can vary your PAYG instalments to pay a different amount based on your own estimates. Try using this free PAYG instalment calculator to get a better estimate.

How do I pay my PAYG installments?

1. Visit your MyGov portal and link your MyGov and ATO accounts.

2. Wait to receive a PAYG Instalment Notice or Instalment Activity Statement in your MyGov inbox.

3. With these forms, fill out the basic information regarding your income, expenses, and investments.

4. You will then have the option to make the payment from a bank account or use a credit card for a fee.