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The short answer
PAYG instalments are prepayments of the tax you expect to owe on business and investment income, which the ATO starts once your latest return shows that income and the tax on it above its entry thresholds. Fees from Nigerian clients count, because the ATO treats overseas business income as if earned in Australia, converted to AUD. Check the current thresholds and your instalment options on the ATO's PAYG instalments pages, and set aside cash from each Nigerian payment.
The first year as a sole trader with Nigerian clients often ends with a large tax bill, because no one withheld Australian tax from your fees. The ATO's answer for the following years is PAYG instalments: regular payments toward next year's tax, credited when your return is assessed. This article explains why they start, how your Nigerian income feeds into them, and how to manage the cash when payments arrive in naira or dollars at uneven times.
Why the ATO put you in the system
Salaried people have tax taken from each pay. Fees paid by a Lagos or Abuja client arrive gross of Australian tax: at most a Nigerian company deducts Nigerian withholding tax, which PwC's summary of the 2024 regulations puts at 10% for non-residents' professional and consultancy fees. So the ATO looks at your latest return, and if your business and investment income and the tax on it pass its thresholds, it notifies you that you are in PAYG instalments. The thresholds and the notice process are set out on the ATO's PAYG instalments pages; we have not quoted them here because we did not verify the current figures for this article.
Your Nigerian income counts in full
The ATO's page for Australian residents (last updated 15 June 2026) says business income and consultancy fees from overseas clients are declared "as if it were earned in Australia", and that all foreign income must be converted to Australian dollars. So the gross AUD value of your Nigerian fees, before any Nigerian tax deducted, is what drives your Australian tax and therefore your instalments. Nigerian tax withheld may support a foreign income tax offset if the ATO's conditions are met, which would reduce the tax and the instalments, but it does not reduce the income figure.
How instalments are usually set
In outline, the ATO offers two ways to pay: an amount it calculates from your last assessment, or a rate it gives you, applied to the instalment income you earn each period. Many sole traders pay quarterly. You can usually vary an instalment if you expect your income to fall, but varying too low can bring a charge. Check the exact options, due dates and variation rules on the ATO's pages or with your tax agent before choosing.
| Approach | Suits | Watch for |
|---|---|---|
| Pay the amount the ATO calculates | Steady income | If a big Nigerian contract ends, the amount may be too high |
| Apply a rate to each period's income | Uneven income from a few clients | You must convert and total each period's foreign receipts |
| Vary the instalment | A clear drop in income | Rules and possible charges for under-estimating |
Worked example
Example only, figures invented. Emeka, a resident developer in Sydney, earns most of his income from two Nigerian startups. Suppose the ATO gives him an instalment rate of 15%. In one quarter he receives US$6,000 and ₦2,000,000. At the rates he uses for tax, those are A$9,000 and A$2,000, so his instalment income is A$11,000 and his instalment is A$1,650. If a client withheld Nigerian tax, he still uses the gross fee.
When income from Nigeria is lumpy
Nigerian clients often pay in large, irregular amounts: a deposit at the start of a project, nothing for two months, then the balance. Under an amount-based instalment, you pay the same sum each quarter regardless. Under a rate-based instalment, the quarter in which a big payment lands carries a big instalment. Neither is wrong; choose the one that fits how your cash arrives, and talk to your tax agent if a contract ends or a client stops paying.
Managing the cash
- Set aside a share of each payment as it arrives, in the currency it arrived in, and convert in time for the due date.
- Keep a running AUD total of each period's receipts, using the same conversion method as your return.
- Remember naira you hold can lose value against AUD before the instalment is due; convert the tax share earlier if that worries you.
- Chase late Nigerian payments early: an instalment based on income you invoiced but have not yet received can still fall due. See when a Nigerian client has not paid.
If you are registered for GST, your instalments are usually reported on the same activity statement as GST. Your Nigerian sales are often GST-free, covered in GST on services to Nigerian clients.
Where Pryme fits
A Pryme Business Account holds naira and dollar receipts in their own currencies, and you can keep a separate balance for tax. The Finance agent can prepare each quarter's list of receipts with the AUD values for you to check; it prepares, you approve. Convert with Swap when you are ready to pay, with the rate and fee shown first.
Questions people ask
Why did I get a PAYG instalment notice?
Your latest return showed business or investment income, and tax on it, above the ATO's entry thresholds. Check the current thresholds on the ATO's PAYG instalments pages.
Does income from Nigerian clients count for PAYG instalments?
Yes. The ATO says overseas business income is declared as if earned in Australia, converted to AUD.
Can I reduce my instalments if my Nigerian contract ends?
Usually you can vary them, but check the ATO's rules first, as under-estimating can bring a charge.
Does Nigerian withholding tax reduce my instalments?
It does not reduce your income figure. It may support a foreign income tax offset, which reduces tax, if the ATO's conditions are met.
Sources
- ATO: Australian resident for tax purposes, foreign and worldwide income (last updated 15 Jun 2026) · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- ATO: Australians doing business overseas (last updated 16 Feb 2016) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.