Tax dough jars: how to set aside GST, PAYG and super as you earn

Grandmothers had it right: keep the rent money in the tin on the mantelpiece, and the grocery money in the jar by the kettle. Small business tax works the same way. The money for GST, PAYG and super is not yours. It is the ATO’s, and your employees’, and it is only passing through. The trouble starts when it passes into the same account as everything else and gets spent.

Why do tax bills ambush small businesses?

Because the money arrives in one place and leaves in several. A customer pays $1,100, of which $100 is GST. A wage goes out, and a slice of it is tax withheld for the ATO. A pay run triggers super. The account balance looks healthy, but part of it was never yours.

Then the BAS arrives, and the cash has been spent on stock, rent and wages. The business is profitable but cannot pay. Our page on BAS and GST cash-flow loans covers the bridging side. This guide is about stopping it happening.

Which tax jars do I need?

Start with three, and add a fourth if you owe income tax instalments.

Jar one: GST. GST is added at 10 per cent to the price, so in a GST-inclusive sale, one-eleventh of the amount is GST. On $1,100 of takings, $100 belongs in the GST jar. You can offset GST you paid on business purchases (credits), so your net GST liability is usually less than the full amount, but starting with the full amount is safer.

Jar two: PAYG withholding. Tax you withhold from employees’ wages. The ATO’s page on PAYG withholding says employers must work out how much tax to withhold, track those amounts and report them. Move the withheld amount to the jar every pay run.

Jar three: super. Business.gov.au gives the standard super guarantee as 12 per cent of qualifying earnings, with some awards or agreements requiring more. From 1 July 2026, the ATO says Payday Super means super is paid with each wage payment instead of quarterly. That makes this jar a per-pay-run job.

Jar four: PAYG instalments and income tax. If you pay instalments towards your income tax, or expect a tax bill after year-end, a fourth jar smooths it. Your accountant can suggest a weekly or monthly percentage of profit.

How do I set the jars up?

1. Open separate accounts. Most banks let you open extra business accounts or sub-accounts cheaply. Label them clearly: GST, PAYG, Super, Income tax.
2. Pick a rhythm. Weekly works well, or match your pay run.
3. Automate the transfers. A scheduled transfer on a set day removes the temptation to skip it.
4. Start with the full amounts. Adjust down only with your accountant’s advice.
5. Leave the jars alone. The only withdrawals are tax payments.

What are the dates that matter?

According to the ATO, quarterly BAS lodgers (generally GST turnover under $20 million) lodge and pay on:

Quarter	Period	Generally due
Q1	July to September	28 October
Q2	October to December	28 February
Q3	January to March	28 April
Q4	April to June	28 July

Online lodgers and clients of registered tax or BAS agents may get extra time, though Q2 already includes an extension. Monthly lodgers lodge and pay by the 21st of the following month. Check your own due dates with the ATO or your agent. Put these dates, and the amounts you expect, on a calendar.

A worked example

An illustration, using no real business. A small bakery takes $22,000 a week in GST-inclusive sales, of which about 60 per cent is subject to GST. Its owner moves a GST slice each week and also moves PAYG withheld and super on the fortnightly pay run.

• GST slice: for the taxable portion of $13,200, one-eleventh is $1,200 a week.
• Wages: $9,000 a fortnight gross, with, say, $1,400 withheld for tax and $1,080 of super at 12 per cent.
• Weekly jar transfers: $1,200 for GST, plus about $700 for PAYG and $540 for super averaged weekly.

Over a 13-week quarter, the GST jar holds around $15,600, minus GST credits the bakery claims on purchases, which the owner will see on the BAS. The result is a BAS that is paid from money already set aside, with no scramble. The owner may well find the jar holds more than the BAS needs, and the surplus is a welcome cushion.

If your own picture is different, the principle holds. Do the sums with your numbers, and ask your accountant to check the slices.

What if the jars aren’t full?

Be honest about why. If it is a one-off, such as a large customer paying late, a short-term bridge may help, and our page on funding a tax bill explains when borrowing makes sense. If it is the third quarter in a row, borrowing only adds repayments to the same habit. The fix is to refill the jars gradually and to cut or defer other spending.

Contact the ATO early if you cannot pay in full. Business.gov.au points owners to 13 11 42 for unpaid tax or super. Lodge on time even if you cannot pay, as it keeps your record tidier.

What about contractors, sole traders and trusts?

The jars work for any structure, but the details differ. A sole trader pays tax on profit through their personal return, so the income tax jar matters a lot. A company pays tax at the company level and may also pay its directors, which brings PAYG withholding and super into play. A trust distributes income, which has its own consequences. If you use contractors, whether they are really employees for super and withholding purposes is a question for your adviser, not a guess.

Whatever your structure, ask your accountant for the percentages and review them each quarter. A twenty-minute call can save a year of worry.

What if my business is seasonal?

Jars need more care when income is lumpy. In a busy month, the GST and income tax slices are large; in a quiet month, they shrink, but the BAS still arrives and the wages still go out. Overfill the jars in the peak, and let them carry you through the lull. Our guide on slow-season funding covers how to plan the dip, and the same discipline applies to tax.

How does this help when I want funding?

Quite a lot. Lenders read bank statements. A business that sets aside tax visibly, with regular transfers, on-time BAS payments and no ATO surprises, looks organised and reliable. ATO debt is considered case by case, but a record of staying on top of obligations only helps. Our guide on what lenders see in your bank statements explains how.

How do I review the jars?

Once a quarter, sit down with your BAS and check:

• Did the GST jar match what was owed? If it held too little, raise the slice. If too much, you have found a buffer.
• Were PAYG and super paid on time?
• Are your turnover and wages changing? A growing business needs bigger jars.
• Is your income tax jar tracking your accountant’s estimate?

Also remember the register-for-GST threshold of $75,000 in turnover. If you are approaching it, talk to your adviser before you cross it so the first BAS does not come as a shock.

Next step

Tax jars will not make tax disappear, but they stop it ambushing your cash flow. If you are already in a squeeze, tell us what is happening. A lending specialist reads each enquiry and calls you. There is no credit check just to ask, and your details are not sprayed over a pile of lenders. Accurate figures for the amount owing, the due date and what caused the gap let us point you at the right option first time. See if you qualify.