How do I set up a payment plan with the ATO in Australia?
Yes, you can set up a payment plan with the Australian Taxation Office (ATO) if you cannot pay your tax debt on time. This allows you to pay in instalments, helping manage your financial obligations and potentially avoiding further penalties.
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How it works in practice
What is an ATO Payment Plan?
An ATO payment plan allows individuals and businesses facing financial difficulties to pay their tax debts in instalments over an agreed period. This is an official arrangement with the Australian Taxation Office to manage your outstanding tax obligations, including income tax, GST, or FBT. The goal is to provide a manageable way to clear your debt without incurring further enforcement action.
How to Set Up Your Plan
Most payment plans can be set up quickly and easily online through your myGov account linked to the ATO. This self-service option is available for many individuals and small businesses with simpler tax debts. For more complex situations, such as larger debts, prolonged financial hardship, or if you've defaulted on a previous plan, you may need to contact the ATO directly by phone or through a registered tax agent to discuss your options.
Important Considerations
While a payment plan helps manage your debt, interest charges (General Interest Charge - GIC) may still apply until the debt is fully paid. The ATO assesses each request based on your individual circumstances, aiming for a plan that is realistic and sustainable for you. Being proactive and communicating with the ATO early is crucial for securing a favourable arrangement.
Important exceptions
Payment plans are generally available, but there are exceptions. If you have a history of not complying with tax obligations or defaulting on previous payment arrangements, the ATO may be less likely to grant a new plan or may impose stricter conditions. Additionally, if your tax debt arises from an ongoing and unaddressed business issue, the ATO may require you to address the root cause before agreeing to a plan. In cases of significant financial hardship, the ATO might offer other support, but you may need to provide extensive documentation.
Plans can be cancelled if you fail to make payments or meet other agreed-upon conditions, leading to the full debt becoming immediately due and potential further penalties.
What you should do now
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Review your total tax debt and realistically assess your current financial capacity to make regular payments.
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Log in to your myGov account, linked to the ATO, and navigate to the 'Payment plans' section to check eligibility for an online arrangement.
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If eligible, use the online tool to propose a payment schedule that is affordable and sustainable for your circumstances.
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If ineligible for an online plan or facing severe hardship, contact the ATO directly by phone or through a registered tax agent to discuss tailored options.
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Once a plan is agreed upon, ensure you adhere strictly to the payment dates and amounts to avoid defaulting and incurring additional charges or enforcement.
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