Dynamic PAYG Instalments: What Physio Practice Owners Should Know

The ATO says Dynamic PAYG instalments are coming from 1 July 2027.

The idea is to help PAYG instalments line up with real business results, not just old numbers.

That could be useful for physio practice owners. But it is not something to ignore until 2027.

PAYG instalments already affect cash flow. If they are too high, the clinic feels tight. If they are too low, the tax bill later can hurt.

Why PAYG instalments matter

PAYG instalments are tax payments made during the year.

Think of them as paying your business tax bit by bit.

The problem is that a clinic can change fast.

A good year can turn into a tight year if:

• a senior physio leaves
• bookings drop
• rent goes up
• wages rise
• a new room takes time to fill
• equipment costs hit at the wrong time

If PAYG instalments are based on old profit, they may not match what is happening now.

What the ATO update says

The ATO update says a new Dynamic PAYG instalment method will help payments match real time business performance from 1 July 2027.

The ATO is also asking for feedback.

That means the system is not here yet. But the direction is clear. The ATO wants tax payments to better follow current business results.

For clinic owners, this is a reminder to stop treating PAYG as a set and forget bill.

What to check now

You do not need to wait for the new method to check your numbers.

Look at your current PAYG instalments and ask:

• are patient bookings up or down?
• has profit changed since last year?
• have wages or rent gone up?
• did you buy major equipment?
• did you add or lose a practitioner?
• are you putting enough cash aside for tax?

If your clinic has changed, your tax cash flow may need a review.

Be careful with variations

You may be able to vary PAYG instalments in some cases.

But do not change them on a guess.

If you vary too low, you may face a larger tax bill later. If you vary too high, you may starve the clinic of cash you need for wages, rent, super, and suppliers.

Use real numbers. Look at profit, not just bank balance.

A full appointment book does not always mean strong profit. A quiet month does not always mean the year is in trouble.

A simple clinic example

Say your clinic had strong profit last year.

This year, one physio left and you hired a new graduate. Revenue fell for two months. Wages stayed high. Your PAYG instalment may now feel too large.

Or the opposite may happen.

You added a treatment room, hired well, and profit is up. Your PAYG instalment may be too low. That can lead to a bigger tax bill later.

Neither case is about panic. It is about checking the numbers early.

What to do before the next BAS

Before your next BAS or tax planning meeting, pull together:

• year to date profit and loss
• current PAYG instalment amount
• expected wages and rent
• planned equipment buys
• any big changes in practitioner numbers

Then ask your accountant whether the instalment still makes sense.

This is a good habit now. It will matter even more if PAYG becomes more tied to live business results.

Source: ATO, “Dynamic PAYG instalments are coming - have your say”.