Expansion of dynamic monthly business tax payments from 1 July 2027 (May Federal Budget 2026)

As part of its package of measures to reduce red tape, the Government will work with the ATO to expand its pilot of dynamic pay as you go (PAYG) instalment calculations and expand access to monthly business tax payments.

From 1 July 2027, small and medium businesses will be able to opt into reporting and paying PAYG instalments monthly and to using an ATO-approved calculation embedded in accounting software to calculate and vary their instalments. The Government said this will support businesses by enabling tax instalments to better reflect real time business activity each month. Taxpayers with a demonstrated history of non-compliance will be required to report and pay PAYG instalments monthly.