I can’t pay my tax debt, what do I do?
April 23, 2020I have a Tax Debt to the ATO, can I set up a payment plan?
April 23, 2020The ATO guidelines for releasing tax debt are related to the type of tax debt and your situation. As such, in certain cases, you may be able to be released from the tax debt however you need to show serious hardship if you were to pay the tax debt. However, the term serious hardship is a grey area without clear guidelines.
We have seen cases where clients are released entirely from tax debt, though it is infrequent. As a result, the most common result is a remission of the penalties and the general interest charge (GIC). However, the ATO will want to assess all financials and BAS lodgment up to the current date to allow them to understand your full tax obligation.
Types of tax debt eligible for release
- Initially, personal income tax.
- Also, PAYG income instalments.
- Medicare Levy.
- Finally, general interest and penalties associated with the tax debts.
Types of tax debt not eligible to be released
- GST
- Superannuation Guarantee Charge for employees
- Also, PAYG withholding tax for employees
In most cases, there is a mix of tax debts payable that can and cannot be released. As such, in most cases, you would require a mix of either release of tax debt, ato payment plans, or help with tax debt loans to pay out the tax debt entirely.
Contact us or seek professional advice to discuss your options.