Taxpayers that use the instalment rate method for their PAYG instalments could end up paying more than their expected tax liability for the 2008-09 income year.  But you are entitled to vary the PAYG instalment rate to ensure that the correct amount of tax is paid.

Overpaid instalments from previous quarters can then be applied to meet the current PAYG instalment.  Don't forget that the December 2008 quarter instalment was reduced by 20% for many taxpayers.

A taxpayer may be liable to pay an incorrect variation general interest charge where the varied instalment rate is less than 85% of what should have been used.