Do sole traders pay PAYG instalments?
Learn how PAYG instalments may apply to sole traders and what the ATO says about prepaying tax on business income.
Summary
PAYG instalments are regular prepayments of tax on business and investment income. The ATO explains that PAYG instalments can apply to taxpayers with business or investment income, including sole traders.
What this means
PAYG instalments help spread tax payments across the year instead of paying the full amount after lodging a tax return. This can apply where a sole trader earns business income and the ATO determines that instalments are required.
PAYG instalments are different from PAYG withholding. PAYG withholding generally relates to amounts withheld from payments such as wages, while PAYG instalments are prepayments toward your own expected tax.
Typical actions
- Check ATO notices to see whether you have entered the PAYG instalment system.
- Understand whether instalments are quarterly or annual.
- Lodge and pay instalments by the relevant due dates.
- Consider whether a variation is appropriate if income changes.
- Keep cash flow aside for tax payments.
Official ATO sources
Last checked: 20 June 2026
PAYG instalments
Explains PAYG instalments for business and investment income.
Starting PAYG instalments
Explains how taxpayers may start PAYG instalments.
When are PAYG instalments due?
Explains due dates for PAYG instalments.
Related questions
- How is sole trader income taxed?
- What tax obligations do sole traders have?
- What records do sole traders need to keep?
- What is a BAS?
Important notice: Tax Clarity is an independent information tool. This page provides general information based on official sources. It does not provide tax, legal, financial, or accounting advice. Tax rules can change, and how they apply depends on your circumstances. For advice about your situation, speak with a registered tax agent or qualified professional.
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