ATO Payment Plans - A Guide to the Tax Office

ATO Payment Plans - Why use them to pay your Tax Debt?

Regardless of business size, most need to obtain ATO payment plans for BAS or income tax at some point. However, if you’re unable to fulfill your tax responsibilities, the Australian Taxation Office (ATO) will evaluate whether your business is viable and should continue operating. Therefore, it is important to establish tax debt payment plans as early as possible.



As such, many businesses close as a result of not meeting ATO obligations. For that reason, it is essential to obtain approval for tax debt payment plans. 

However, there are alternatives to an ATO payment plan. Consequently, these could include finance options such as:

  • Firstly, short-term caveat loans and second mortgages enable you to keep your current home loan lender. 
  • Secondly, unsecured business finance options include invoice factoring, supplier financing and unsecured business loans.
  • Finally, longer-term finance solutions are designed to pay an unpaid tax debt.

Changes in PAYG requirements require payment plans for tax debt

The Australian Tax Office is opposed to large or small businesses maintaining an ongoing tax debt. As such, don't make a mistake as a result of incorrectly managing your obligations. Because what was previously accepted has changed, and the ATO now wants tax paid as you go (PAYG). As such, a business can find these difficult and ATO payment plans are required.

In the past, businesses would discover their tax debts only after finishing their annual tax returns. However, things have changed, and now business reporting occurs through BAS reporting and online services like myGov accounts.

Be sure to plan your approach and have an understanding of ATO policies. As the ATO will make decisions based on the information provided; ensure you submit accurate information. Also, if your information does not fully meet the ATO policies, the payment plans for ATO debt will be rejected, or the payment terms will be inappropriate. Indeed, it may be advisable to contact your registered tax agent to help apply for a payment plan.

  • Firstly, securing an ATO tax payment plan can be daunting, causing you to delay. However, leaving a tax account in default or unpaid could cause you more issues. Indeed, the ATO will make decisions based on that information. Therefore, ATO payment plans should be the first solution sought.
  • Secondly, securing a suitable payment plan can alleviate risk from the Tax Office; plus potentially prevent a large lump sum payment or an insolvency.
  • Thirdly, remember that setting up a payment plan for your tax debt may be a temporary fix. Indeed, as the plan term is usually a maximum two-year term and therefore the payments too high to manage. As a result, an inappropriate arrangement can affect your ability to pay other accounts and payments.
  • Plus, there are different risks for individuals and sole traders vs companies with tax debt. However, setting up a payment arrangement as a first step can give you breathing space. Indeed, to give time to work out how to pay in full or arrange a  longer-term debt solution.

Read on to gain valuable information on the ATO payment plans to assess your best move forward.

An Overview of ATO Tax Debt Payment Plans

Remember these following points when setting up your tax debt payment plan with the ato. Keep in mind, they are to provide an understanding of what you can achieve and some general options.

  1. Firstly, you can set up automated ato payment plans over the phone for tax debt <$100,000.
  2. Secondly, the preferred tax payment term is eighteen months to a maximum two-year term. However, there are exceptions for longer payment terms.
  3. Thirdly, personal circumstance helps to support a reason for tax debt.
  4. Also, all financials will need to be lodged for the current financial year. Indeed, even if your tax debt relates to a specific financial year other than the current financial year.
  5. Also, your BAS (business activity statements) and other tax obligations will need to be lodged and up to date.
  6. Indeed, your cash flow must be able to meet the ATO payment plan instalments + ongoing tax obligations.
  7. Plus, at times a 20% or more upfront payment may be required to apply for a payment plan for tax debt in Australia.
  8. Finally, superannuation debt has more diligent attention and action by the ATO.

Read below for further information on establishing an ATO payment arrangement. Another option, complete the form below for specialist advice on tax debt payment plans.

If you have failed a payment plan or been rejected for an ATO payment plan then contact Loan Saver Network. 

You may contact us 9 am - 5 pm Monday to Friday at 1300 796 850. Indeed, request a free consultation via the form below.

Let's talk about a tax debt solution that suits you

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Automated ATO Payment Plans

If your tax debt is under $100,000, you can contact the ATO via their website & log in to ato online services. Thereafter, be directed to an automated payment plan service to request, extend, or manage your payment terms.

Otherwise, you can also log into your MyGov account, Link the ATO & set up a payment plan online.

Indeed, if your account is deemed non-compliant you will be redirected to an operator or your online request refused. Therefore, you will need to be prepared for a conversation with the ATO.

The number to contact the ATO is: 13 72 26

Preparing for discussion with the ATO

  • First of all, check the tax account when determining your amount owed. As such, don't rely on statements from the ATO as they could have added fees, interest and penalties.
  • Know the ATO payment plan repayment you can afford. Also, if you are arranging a lump sum payment confirm how you will make the tax payment.
  • Above all, your tax debt payment plan request should be your lowest affordable monthly payment amount. In this situation, base your payment on the turnover months with the lowest cash flow, and highest expenses. To put it another way, be sure to keep your monthly arrangement without strain.
  • Related Information on ATO Payment Plans

Be aware of tax debt payment plan limitations:

  • First, the Australian Taxation Office prefers mitigating circumstances (a personal issue or illness, etc.) to secure a long-term ATO payment arrangement.
  • Secondly, the ATO prefers that you pay the debt off within 24 months.
  • In contrast, a superannuation tax debt can involve shorter payment time frames, as issues can arise with employees’ investment returns.
  • Also, ensure you can make your payments on the due date. Hence, as failure to make the payment by the due date will result in your plan being cancelled. However, if you cannot meet your ATO payment plan obligations contact the ATO immediately.
  • Likewise, make additional payments when you can to put you ahead of your payment plan. As a result, this will allow a buffer in case you face a tough month.
  • Finally, if your ATO debt payment plan payment is not feasible; consider other payment options. Such as negotiating your tax debt balance, tax debt penalties and the general interest charge gic. Otherwise, paying out your ATO debt with a tax debt loan. 

You can calculate your ATO payment plan payments using the ATO’s smartphone App ¬– search for ATO in your app store for more details, speak to the ATO or seek professional advice.

ATO Payment Plan FAQ's

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ATO Payment Plans FAQs

Paying tax by installments could be seen as the standard quarterly BAS obligation. Otherwise, if you are not registered for BAS you would not need to lodge quarly installment. Therefore you would only complete your tax at the end of the financial year.

You can calculate and pay your tax monthly or quarterly as you decide. Then, when you complete your end of financial year tax return you would either have a smaller amount owed, or recieve money back if you have over paid.

ATO Payment plan terms generally are no longer than 2 years. However, the ATO does have some discretion for increased plan terms in exceptional circumstances. Although, the circumstances to obtain a plan in excess of two years are very few. As a result if you cannot pay a tax debt in 2 years it may be advisable to seek a business loan to pay the tax debt.

You may be able to arrange interest-free payment plans for your tax debt. However, the tax office would usually only;y allow for activity statement debt. Therefore the requirements would be:

  • The activity statement debt must be paid off over 12 months.
  • Secondly, your previous lodgement history and payments have been conducted well.
  • Thirdly, you have only missed one payment on a plan in the last 12 months.
  • Plus you have not been able to secure finance to clear your debt.
  • However, you need to agree to the payment plan payment to be by direct debit for the 12 months.
  • Finally, you have been able to display an ability to meet all of your tax commitments.

In some circumstances, you may be able to be released from tax debt. Though, you would need to display that paying the debt would cause you serious hardship. However, the requirements to meet the ATO policies for serious hardship would be:

  • You wouldn’t be able to provide food and accommodation for your family.
  • However, selling your home would not necessarily constitute an inability to provide accommodation.

You can call the Australian Tax Office directly on 132866 between the times of 8.00 am-6.00 pm, Monday to Friday.

  • Firstly, ensure you prepare for your conversation.
  • Above all, do not allow your payment plan for ato debt or any other ATO arrangements to lapse before calling them.
  • However, If you cannot meet an agreed payment then call the ATO ahead of time.
  • Finally, see the payment plan estimator from the ATO.

There are a number of different loan facilities available to pay a tax debt. Therefore, the various loan facilities may include:

  • Traditional tax debt loans – where you would refinance your home loan and obtain additional money to pay the ATO debt.
  • Additionally, second mortgage loans and caveat loans allow your existing home loan to remain. As a result, the new loan will be set up as an additional business loan behind your home loan.
  • Business Loans secured against a vehicle; these loans can be great however they are limited to the equity available in your car.
  • There is a range of business loans available, see below an overview or this business loans comparison to pay a tax debt.
  • Supplier loans; as the ATO is viewed as a supplier you may obtain a supplier loan to pay the ATO debt. However, these supplier loans are best for loans that are paid off in no more than 6 months. Therefore, they may not be a suitable option if you are seeking a longer loan term.
  • Unsecured business loans; these loans are not secured by the property. However, they usually have an option for a caveat or unregistered mortgage. Although, this may only be lodged in the event that the loan goes into default or payments are not made.
  • Invoice factoring finance where you are able to obtain finance against unpaid invoices. However, you would need to ensure you had sufficient future revenue or working capital to meet your obligations. As you would forego the future business cash flow from that invoice.


Loan Saver Network Can Help

Loan Saver Network can offer advice on ato payment plans, negotiation of Tax debt, help with tax debt loans, and tax debt insolvency issues. If you're looking for professional debt help, contact Loan Saver Network on 1300 796 850 today.