The PAYG (Pay As You Go) instalment system in Australia helps manage tax payments by spreading them throughout the year, beneficial for self-employed individuals, investors, and businesses. Instalments are based on the Australian Taxation Office (ATO) estimates or a fixed rate from actual income and are paid quarterly or annually. Adjustments can be made for fluctuating income to avoid interest charges. This system aids in cash flow management, budgeting, and compliance with tax obligations.