Compliance

Compliance Essentials for PAYG & GST Instalment Changes 2026-27

With the GDP adjustment factor rising to 5% and changes to accounting periods coming, businesses need to update their PAYG & GST instalments systems and forecasting to comply in the 2026-27 year.

By NomadicTax Research Team • 5-8 min read • July 9, 2026

## What Businesses Need to Know From **1 July 2026**, the GDP adjustment factor used to calculate PAYG (Pay As You Go) and GST instalment obligations will rise to **5%**. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/GDPupliftfactor?utm_source=openai)) This affects instalments for quarterly periods, particularly for those whose accounting periods start after 31 March 2026. Entities with substituted accounting periods beginning **1 January, 1 February or 1 March 2026** will **retain the previous 4% adjustment** for that income year. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/GDPupliftfactor?utm_source=openai)) ## Practical Compliance Steps - **Update accounting and tax software**: - Ensure your tax preparation tools are set with the new 5% GDP uplift for instalment calculations if relevant. - If your software allows multiple accounting periods, verify which period applies to your business. - **Forecast cash flows**: - An increased instalment factor means instalment payments may increase — plan cash flows accordingly. - Consider smoothing instalments if revenue is seasonal. - **Check accounting period start dates**: - If you operate under a substituted accounting period starting on 1 January–March 2026, you’ll maintain 4% for that period. If your accounting period starts from 1 April 2026, you’ll need to apply 5%. Falling on the cusp requires accurate tracking. - **Review GST instalment schedules**: - Businesses that pay GST via instalments will see changed instalment amounts — review thresholds and timing with suppliers and cash position. ## Example of Impact SmallCo Pty Ltd, a retail business, has a financial year from **1 April 2026 – 31 March 2027**. From 1 July 2026, SmallCo calculates its PAYG instalments using the 5% uplift on notional tax; this increases quarterly payments, meaning budgets must be adjusted. If instead SmallCo had an accounting period starting 1 February 2026, for that year they still use the 4% factor, but must switch to 5% for subsequent years. --- **Key takeaway**: these instalment adjustments may seem technical, but incorrectly applying them can lead to underpayments or penalties. Businesses should update systems, forecast carefully, and consult tax advisors if needed.