If you or a client can't pay on time, the ATO can help. You will still need to lodge your activity statements and tax returns on time, even if you can't pay by the due date. You will avoid a penalty for failing to lodge on time and show the ATO that you're aware of your obligations and doing your best to meet them.
The easiest way to set up a payment plan is by using the ATO's online services, which are available 24 hours a day. You may be eligible to use their online services if you:
- are an individual or sole trader
- have an income tax or activity statement debt of $100,000 or less.
You'll need a myGov account linked to the ATO. If you don't already have one, you can create a myGov account in a few simple steps and link to the ATO to access their online services.
Phone the ATO
Use their automated phone service to arrange a late payment or pay by instalments, you'll need your tax file number (TFN) or Australian business number (ABN) before you phone.
- Use the payment plan estimator to work out a plan that meets your circumstances, taking into account the payment plan conditions and how quickly you can pay off the debt, including how much interest you'll be charged.
- Phone our automated service to set up the payment plan
- for individuals phone 13 28 65
- for businesses phone 13 72 26.
- If you pay late or enter into a payment plan, you will generally have to pay interest on top of your debt.
- If you can't enter a payment plan through our automated phone service, you'll be connected to a person who will help you.
Registered tax or BAS agents can set up a payment plan through Online services for agents. Alternatively, they can request a payment plan through the Tax Agent or BAS Agent Portal mail.
The following information should be included in portal mail:
- Topic: Debt and lodgement
- Subject: Payment arrangement request
- The client's payment plan offer, including
- payment amounts
- payment frequency
- payment method
- reason for the request
- steps taken to prevent the situation from occurring again.
Secured Payment Plan
If the ATO can't reach an agreement with you about paying your debt, they may consider accepting an offer of security where you request that the ATO defer the time of payment of a debt, or where you are seeking to pay a debt by instalments.
The ATO's preferred securities are:
- a registered mortgage over freehold property
- an unconditional bank guarantee from an Australian bank.
Interest-Free Payment Plans for Activity Statement Debts
If you're a small business with an activity statement debt, you may be able to pay it off interest-free over 12 months. You need to have a good history of tax lodgements and payments.
- Use the payment plan estimator to work out a suitable payment plan.
- Phone us on 13 28 66 (8.00am to 6.00pm weekdays) to set up the payment plan.
You're eligible for an interest-free payment plan if your business:
- has an annual turnover of less than $2 million
- has a recent activity statement debt of $50,000 or less, which has been outstanding overdue for no longer than 12 months
- has a good payment and lodgement compliance history, including:
- no more than one payment plan default within the last 12 months
- no outstanding activity statement lodgements
- is unable to obtain finance (such as a loan) through normal business channels
- is able to demonstrate ongoing viability.
How it Works
You have to agree to a payment plan that allows the debt to be paid by direct debit within 12 months. Even if you receive a letter stating that interest will apply, it will be remitted as long as you maintain your payment plan.
While you're paying off the debt:
- you can check your running account balance by logging into the Business Portal or phoning the ATO on 13 28 66 (8.00am to 6.00pm weekdays)
- registered agents can check by using Online services for agents, Tax Agent Portal or BAS Agent Portal, or phone 13 72 86 (fast key code 1 2 5 1).
You must meet all of your other tax payment and lodgement obligations.
Note: If you default on the plan, the interest-free period will end immediately and the payment plan may also be cancelled.
If You Are Already on a Payment Plan
You can ask the ATO to change your existing payment plan to an interest-free payment plan if you satisfy the eligibility criteria.
If your request is approved, the ATO will cancel your previous plan. The interest-free period will start from the date you enter into the new plan.
If your debt is with an external collection agency, you'll need to negotiate this with them.
Assessing Business Viability
If you're negotiating with the ATO about a debt, they may require you to show that your business is viable. When assessing a business's viability, they will look at its ability to pay its debts and meet ongoing commitments. The assessment considers a range of indicators, including:
- gross margin
- cash flow
- asset/liability position (including working capital)
- debtor/creditor position
- availability of funding.
If you're asked to demonstrate the viability of the business, you'll need to provide the following information within an agreed timeframe:
- a proposal to pay all amounts owed to the ATO in the shortest possible timeframe, while allowing all future tax obligations to be met by the due date
- details on how the debt arose
- steps taken to mitigate the debt (for example, loan applications)
- the most recent statement for each bank or financial institution account held
- the following documents for the year to date and the two previous financial years
- detailed profit and loss statement or statement of financial performance
- detailed balance sheet or statement of financial position
- details of any overdraft or loan facilities, including term loans, hire purchase and leasing facilities (include the balances owing, the monthly repayment amount for each debt commitment and the limit for overdrafts)
- aged creditors listing
- aged debtors listing
- any other relevant information that may help the ATO assess your proposal.
Where to Send Your Financial Information
Send financial documentation with your ABN and company name on all documents to the ATO
- send the documents using secure mail in the Business Portal – registered agents can use online services for agents, Tax Agent Porta or BAS Agent Portal
- Fax on 1300 724 793
- Mail to
Australian Taxation Office
PO Box 1129
PENRITH NSW 740