What Is the GDP Adjustment Factor Change?
From 1 July 2026, the Australian Taxation Office increases the GDP adjustment factor used to calculate quarterly GST and PAYG instalments from 4% to 5% for most taxpayers. This adjustment essentially increases estimated instalment amounts for businesses with non-standard accounting periods. (softwaredevelopers.ato.gov.au)
Who Is Affected?
- Businesses using PAYG instalments with substituted accounting periods (SAP). Those whose income years commenced 1 January, February or March 2026 will still use 4% for those specific SAPs, but all others for the 2026-27 year move to 5% factor. (softwaredevelopers.ato.gov.au)
- Businesses with standard accounting periods shifting to the new fiscal year may see higher instalments for GST and PAYG. |
Practical Considerations & Tips
- Cash flow planning: Prepare for potentially higher instalments owing to increased rate. Review your GST liability and income forecasts earlier.
- Software update: Check whether your accounting or tax software supports the new factor automatically. If not, manual overrides or adjustments may be needed.
- Review SAP settings: Confirm whether your business qualifies for the substituted accounting period rules and ensure correct factor is applied in those cases.
Example
- Company A has standard accounting period starting 1 July. For 2026-27, instalments will include the 5% GDP uplift. A previous estimate of $20,000 per quarter might become $21,000 depending on turnover and tax base, reflecting a modest rise.
- Company B started its accounting year 1 March 2026 under SAP. It continues using 4% factor for that year due to the transitional rule. Next year, it shifts to 5%.(softwaredevelopers.ato.gov.au)
Actions Before 30 June 2026
- Forecast your taxable income, GST obligations to estimate instalments under new factor.
- Adjust your budgeting to accommodate possible increases.
- Engage your accountant to plan instalment schedule semi annually or quarterly under new rules.
Wrap-up: This change may seem modest in percentage terms, but across a year its effect compounds. Understanding how and when these rates apply will help your business manage cash flow and avoid surprises.