6‑5 The Pay as you go (PAYG) system6‑5 The Pay as you go (PAYG) system

#### 6‑5 The Pay as you go (PAYG) system (1) Parts 2‑5 and 2‑10 establish the PAYG system, which has 2 components: • PAYG withholding (Part 2‑5) • PAYG instalments (Part 2‑10). PAYG withholding (2) Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner. For a list of the payments and other transactions to which PAYG withholding applies, see Division 10 PAYG instalments (3) You pay PAYG instalments directly to the Commissioner. These are usually based on your GDP‑adjusted notional tax or your ordinary income for a past period, but excluding: • income subject to PAYG withholding (with certain exceptions) • exempt income, or income that is otherwise not assessable. An instalment is usually paid after a quarter, but some taxpayers are eligible to pay an annual instalment after the end of the income year.