ATO Payment Plans
What is a payment plan?
A payment plan is an agreement with the Australian Taxation Office (ATO) to pay your tax liability in instalments over a period of time.
Not only is it a practical way to meet your payment obligations, but it allows you to break down your payment into smaller amounts that are made via instalments and spread over a fixed period of time. Within a payment plan, you pay back an agreed sum of money weekly, fortnightly or monthly until the balance is cleared.
Who can enter into a payment plan?
Individuals, sole traders, businesses and tax practitioners on behalf of their clients.
What to do before setting up a payment plan
First of all, if you have one, talk to your tax agent who may even be able to negotiate a suitable instalment program on your behalf. If you dont have a tax agent, read on………
When thinking about setting up a payment plan you need to consider:
- how much you can pay to meet each scheduled instalment (including interest on any overdue amounts)
- your future obligations.
We also recommend you use the ATO online payment plan estimator to calculate a payment plan you can afford. This tool will also help you work out how quickly you can pay off a tax debt and how much interest you’ll be charged. The longer you take to pay off your debt, the more interest you’ll need to pay.
Once you’ve worked out a suitable payment scenario based on your circumstances, you can use it as a guide to set up a payment plan to meet your tax obligations.
IMPORTANT – you cannot use this estimator for super guarantee charge debts.
Setting up a payment plan
In some circumstances you will be able to set up a payment plan online without the ATO’s assistance.
On other occasions – even if the payment plan estimator indicates you have found a suitable arrangement – you may still need to contact the ATO for assistance. They may ask for more detail about your circumstances, including about your:
- bank balances, creditors and debtors.
If you are in business, they may ask you to provide details of your:
- business income (over the last 3 months)
- business expenses (over the last 3 months)
- other cashflow information, such as whether
- the business is seasonal
- previous activity statements are a reflection of ongoing statements.
The ATO ask for this information so they can work with you to create an appropriate and manageable payment plan.
To set up a payment plan without the ATOs assistance, see the information below for your particular circumstances.
Individuals and sole traders
The easiest way to set up a payment plan if you owe $100,000 or less is to use the ATOs online services. To use online services, you’ll need an active myGov account linked to the ATO.
If you can’t access online services via myGov, you phone the ATOs automated service for individuals on 13 28 65. If you have trouble using the automated phone service, you’ll be connected to a person to help you.
Make sure you have your Australian business number (ABN) or tax file number (TFN) handy, and the full details of your outstanding amount. You may also be able to make a late payment through this number.
Ultimately the ATOs aim is to help you pay amounts you owe in the shortest time and save you interest. When you set up a payment plan, you’ll be provided with:
- an upfront amount you need to pay
- examples of instalment amounts that have been manageable for clients with similar circumstances to yours.
You can vary the upfront and instalment amounts above or below the amounts provided – up to certain values.
If you can’t afford a payment plan offered online, or you owe more than $100,000, phone the ATO on 13 11 42 during our operating hours to discuss your options.
If your business owes $100,000 or less, you can set up a payment plan:
- via Online services for business – select Accounts and payments then payment plans
- by phoning the ATOs automated service for businesses on 13 72 26
- through your registered tax agent or BAS agent who can use online services to enter a payment plan on your behalf.
If you have trouble using the automated phone service, you’ll be connected to a person who will help you.
To set up a payment plan, you’ll need your ABN or TFN, and the full details of your outstanding amount.
If you have overdue amounts from activity statements, you may be eligible for an interest-free payment plan if you meet the eligibility criteria
If your business owes over $100,000, phone the ATO on 13 11 42 during our operating hours to discuss your options.
If you’re already in 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.
Phone the ATO on 13 28 66 during their operating hours to change to an interest-free payment plan if eligible.
Managing your payment plan – Setting up direct debit
After a payment plan is set up there are a number of ways you can manage the details around your specific plan:
– setting up a direct debit
– changing from a direct debit to another payment method
– modify an instalment date or amount
– update the instalment amounts of your payment plan
Important information for taxpayers entering a payment plan
- Any tax credits and refunds you receive will be used to reduce your tax debt but won’t replace the required instalment payment. This is called offsetting. Offsetting is where the ATO use a credit or refund from one account to pay off an outstanding debt on another account.
- General interest charge (GIC) will accrue until the debt is paid.
- You can make additional voluntary payments or pay off the debt at any time.
- You still need to lodge your activity statements and tax returns and pay any associated liabilities on time.
Checking the status of your payment plan
Individuals and sole traders can view the status of their payment plan in ATO Online Services. From the Tax menu in ATO Online Services, select ‘Payment’ and then select ‘Payment Plans’ from the next menu.
Business clients can check their payment plan status from the ‘Accounts and Payments’ menu in Online Services for Business. To see more detailed information about each payment plan status, click the help icon.
If you’ve missed a scheduled instalment and/or haven’t paid another tax obligation by the due date, you may still have time to pay before your payment plan defaults.
You may receive a letter from the ATO informing you that your accounts are in ‘arrears’, and you have an opportunity to catch up before your payment plan defaults. The ‘arrears’ letter will outline the minimum amount you will need to pay now to prevent your payment plan from defaulting and other action(s) you need to take.
myGov users will receive the letter through their myGov inbox in the first instance. If you have set up a preference to send correspondence to your tax agent, the arrears letter will be sent to your agent.
For more information about a secured payment phone the ATO on 13 11 42 during their operating hours or speak to your tax agent.
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