Can you vary, and until when
Anyone in the instalment system can vary, in either direction, as often as every quarter. The hard limit is timing: the variation must be lodged on or before the day the instalment is due, and before you lodge your tax return for the year. The 2026-27 quarterly deadlines are 28 October, 28 February, 28 April and 28 July; the full list, including agent extensions, is in PAYG due dates.
Before touching the form, work out what the year's tax actually looks like. The PAYG instalment calculator turns an income estimate into an annual tax figure and the matching quarterly amounts, which is exactly the number T8 wants.
The steps on the activity statement
- Estimate your instalment income for the full year
Gross business and investment income, GST-exclusive. Write down how you got the figure; that record is your defence if the ATO asks about the variation later.
- Estimate the tax on that income
Apply 2026-27 rates to the estimate. Keep it honest rather than optimistic; the 85% rule punishes wishful thinking, not genuine misses.
- Complete the labels
Estimated tax for the year at T8, the varied instalment for this quarter at T9, a reason code at T4, and the amount payable at 5A. On the rate method you vary the rate at the equivalent labels instead.
- Lodge and pay by the due date
The variation and the payment travel together. The varied figure carries through to your remaining quarters for the year, adjusted for what you have already paid.
Worked example: profit falls from $100,000 to $70,000
T4 variation reason codes
The ATO publishes a fixed list of codes. Pick the one that best matches why your instalments no longer fit:
| Code | Reason |
|---|---|
| 21 | Change in investments |
| 22 | Current business structure not continuing |
| 23 | Significant change in trading conditions |
| 24 | Internal business restructure |
| 25 | Change in legislation or product mix |
| 26 | Financial market changes |
| 27 | Use of income tax losses |
| 33 | Consolidations |
The 85% shortfall rule
If your varied instalments end up totalling less than 85% of the tax actually payable on your instalment income for the year, the ATO can charge general interest on the difference, on top of the tax you still owe. In the example above, the estimate produced $12,920 of tax; as long as actual tax lands at or below $15,200, the varied instalments clear the 85% floor and no interest applies. Estimate honestly, keep the working, and revise the estimate each quarter as the year firms up. What the interest costs when the rule does bite is covered in missed PAYG instalments.
Can you vary after the due date? No.
Once the due date passes, that quarter is locked. The remedies left are the next quarter's variation, which picks up your revised estimate for the rest of the year, or simply waiting for the credit at assessment, where any overpayment comes back as a refund. If the due date is close, lodge the variation first and refine it next quarter rather than missing the window chasing a perfect estimate.
Frequently asked questions
How do I vary a PAYG instalment?
Can you vary a PAYG instalment after the due date?
Can I vary my instalment to zero?
What happens if my estimate turns out wrong?
Does a variation carry to later quarters?
Do I need to tell the ATO why I varied?
Sources
- ATO: How to vary your PAYG instalments (labels, reason codes, deadline, 85% rule)
- ATO: PAYG instalments overview
Related resources
PAYG Instalment Calculator
Build the estimate T8 asks for
Open →PAYG Instalments
The whole system: entry, methods, exit
Open →Missed PAYG Instalments
What GIC costs when a quarter goes unpaid
Open →
Narelle Hartigan is a CPA-qualified tax accountant with over a decade of experience in Australian personal taxation and payroll. She founded PAYG Calculator Australia to make tax withholding easy for every Australian worker to understand.