PAYG instalments can be confusing.

They can also affect cash flow in a big way.

If your instalments are too high, your practice may feel short on cash. If they are too low, you may get a tax bill later.

So it is worth checking them.

---

What are PAYG instalments?

PAYG instalments are payments you make during the year toward your expected tax bill.

Think of them like paying tax bit by bit, instead of all at once.

The ATO may work out an amount for you based on past income.

That can be fine if your practice is steady.

But business is not always steady.

---

When might they be too high?

Your PAYG instalments may be too high if your practice profit has dropped.

For example:

• patient numbers are down
• a practitioner has left
• you had to cut hours
• costs have gone up
• you took time away from the business
• you stopped offering a service

In that case, paying the same instalment as last year may put pressure on cash flow.

You may be able to vary the amount.

---

When might they be too low?

They may be too low if your practice is doing better than before.

For example:

• you hired more staff
• you opened more rooms
• patient bookings are up
• you added a new service
• profit has increased

That sounds good. But it can lead to a bigger tax bill later if instalments are too low.

No one likes a surprise tax bill.

---

Do not guess

This is the important part.

Do not vary PAYG instalments just because cash feels tight.

If you lower them too much, you may need to catch up later. There can also be penalties or interest if the variation is not reasonable.

Use real numbers.

Check your profit and loss report. Look at income, wages, rent, super, loan payments, and other costs.

Then talk to your accountant.

---

Why this matters for physio clinic owners

Clinics often have uneven cash flow.

Some months are strong. Some are quiet. Staff changes, school holidays, rent rises, and equipment costs can all change the picture.

PAYG instalments should match what is really happening in the business.

If they do not, it may be time to review them.

A small check now can stop a cash flow headache later.