More support for taxpayers in the face of the COVID-19 health crisis has just been announced in the form of a suspension of the indexation of tax instalments for the 2020-21 income year.

Both income tax (PAYG) and GST instalments are included, which the government says affects 2.2 million and 81,000 taxpayers respectively.

Indexation, using gross domestic product outcomes, is used to gauge a range of instalment amounts annually to reflect anticipated income growth. For the purposes of calculating instalment amounts the ATO makes taxpayers pay throughout the year, it uses historical GDP, unlike other payments such as pensions, which are indexed against the consumer price index.

Given the COVId-19 crisis, the government has decided to suspend such indexation for the entire 2020-21 income year.

Of course, you can still vary your instalment amounts if you believe you will otherwise pay too much tax for the year. Other taxpayers who pay instalments based on their current income are not subject to indexation because their instalments already adjust to changes in income. While these taxpayers may not be affected by the suspension of indexation, they can still vary instalments should they wish. Those who do not pay GST by instalments are unaffected.

The ATO reiterates that should anyone require urgent assistance with tax affairs due to COVID-19, there is an emergency ATO support infoline on 1800 806 218.