Indexation of tax instalments suspended

The government will suspend the indexation of tax instalment amounts for the 2020–21 financial year in response to COVID-19.

This change will affect instalments payable to the ATO for taxpayers paying PAYG income tax instalments and GST instalments in 2020–21. Other taxpayers who pay instalments based on their current income are not subject to indexation because their instalments already adjust to the changes in income. Taxpayers who do not pay GST by instalments are also unaffected.

In addition to suspending indexation, taxpayers can still vary their instalment amounts if they believe they will pay too much tax for the year.