It is understandable that occasionally it may not be possible to meet your tax obligations on time because of financial or other difficulties. As a first step, it is important to know how much you owe so you can manage your tax obligations.

If you’re having difficulty paying on time, we can contact the ATO on your behalf to find an acceptable solution. We may be able to make an arrangement to pay by instalments or defer a payment.

ATO payment arrangement

You will usually be eligible to pay your tax debt by instalments if the following conditions are met:

  • you are unable to pay the debt off in full by the due date
  • you want to pay the debt in instalments
  • the debt can be paid off by instalments within two years
  • you have a good compliance history and adequate funds to enter into the payment arrangement and meet any future tax obligations on time.

Provided the ATO accepts the proposed arrangement, personalised payment slips will be issued within 15 working days.

The general interest charge (GIC) is imposed on any amount not paid by the due date (this rate is currently 8.78%). If the ATO allows you to pay the tax debt late, you are required by law to pay the GIC. The GIC is tax deductible in the financial year in which it is incurred. The law also provides for remission of all or part of the GIC in limited circumstances.

Once you’ve committed to a payment plan, you need to pay all instalments and new tax liabilities as they arise, on time and in full. If you don’t, you’ll default on the plan.

If you default on a payment plan, the ATO may impose more stringent requirements before agreeing to a new plan. For example, the ATO may ask for an upfront payment or ask that payments are made by direct debit, or both.

Dealing with the ATO can often be quite a frustrating and nerve-racking experience. Our tax accountants and tax lawyers can assist you with negotiating a payment arrangement. Call us on 02 9223 9166 or submit an online enquiry here.