Compliance
Adjusting PAYG Installments and Withholding: What Businesses Must Do from 1 July 2026
Tax rate cuts and a new GDP uplift factor mean businesses need to update PAYG withholding tables and instalment obligations before the 2026–27 year starts.
By NomadicTax Research Team • 5-8 min read • July 29, 2026
## What’s changing?
- The **PAYG withholding tax tables** and schedules have been updated to reflect the **tax rate cuts** legislated in the Treasury Laws Amendment (More Cost of Living Relief) Act 2025, effective **from 1 July 2026**. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
- Study and training support loan repayment thresholds have been indexed. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
- The **GDP adjustment (uplift) factor** for calculating quarterly PAYG instalments and GST instalments increases to **5% for 2026-27**, up from 4%. Taxpayers whose income year begins from 1 April 2026 will use 5%; those with substituted accounting periods from Jan-Mar 2026 may still apply 4%. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/GDPupliftfactor?utm_source=openai))
## Who needs to update systems
- Businesses using **payroll software** tied to old withholding tables must ensure updates are installed.
- Tax agents advising clients should alert them about the higher GDP adjustment in instalments, which affects cash flow planning.
- Employers with employees receiving lump sums or termination benefits should check cap amounts in super and tax tables to avoid incorrect withholding. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
## Example
A consulting firm paying monthly salaries needs to withhold income tax for its staff. With the tax rate cut, the amount withheld per pay run will be slightly lower than under old rates. Simultaneously, when estimating quarterly PAYG instalments, they must use a 5% uplift if their income year starts on or after 1 April 2026—this increases instalment obligations.
## Action checklist
- Download and implement the updated **NAT withholding schedules** from the ATO website before 1 July 2026.
- If your accounting income year starts in Jan-Mar 2026, check whether you’re affected by the transition of GOP uplift from 4% to 5%.
- Adjust cash flow forecasts and ensure sufficient liquidity for potentially higher instalment payments.
- Ensure employees’ loan and training scheme repayments are calculated using updated thresholds.
## Why it matters
These changes protect individuals from over-withholding and help businesses forecast accurate instalment obligations. Failing to adopt the new tables or using incorrect uplift factors can cause cash flow issues, penalties, or underpayment of tax. Being proactive ensures compliance and avoids surprises in the new financial year.