Purpose
Design options for Digital Service Providers (DSPs) to embed a dynamic PAYGI calculation in software, using actual business performance data to provide more accurate PAYGI liability estimates for customers, and to provide an option to report and pay PAYG instalments monthly.
Overview
On 12 May 2026, as part of the 2026–27 Federal Budget, the Government announced that from 1 July 2027 it will enhance the ability of business taxpayers to vary pay as you go (PAYG) instalment payments, so that they are able to adjust more quickly to real-time business conditions. This is referred to as Dynamic pay as you go instalments.
The Government also announced that from 1 July 2027:
- businesses will be given the ability to choose to report and pay PAYG instalments monthly (via opt in)
- taxpayers with a history of non‑compliance will be required to report and pay PAYG instalments monthly.
Background
As part of the ATO’s enterprise priority to enhance the digitalised experience for small business, a pilot was delivered in 2024-25 using the Dynamic calculation method to vary the PAYGI amount on a businesses' activity statement. The calculation method utilised data in accounting software to calculate the PAYG instalment, reflecting current financial performance.
The pilot provided insights into potential challenges, the importance of quality data inputs in producing accurate results, and the possible demand for this type of service.
An Expression of Interest was run to seek participation for the expanded PAYGI pilot and to support consultation activities for the 2026/27 financial year.
Next steps
Insights from the expanded pilot and consultation activities will support the ATO's delivery of:
- a sustainable solution that enables business taxpayers and agents to quickly calculate and vary PAYG instalments based on current business performance
- the ability to choose to report and pay PAYG instalments monthly (via opt in).
Subject to the outcomes of consultation and pilot activities, the ATO intends to support broader DSP adoption from July 2027, with the objective of establishing Dynamic pay as you go instalments solution as an ongoing digital service available through participating software providers.
The ability for businesses to choose to report and pay PAYG instalments monthly is not yet law.
More information
Budget Paper no.2: Budget.gov.au
Dynamic pay as you go instalments – making tax simpler for businesses | Australian Taxation Office