What is a payment plan?
You need to lodge and pay your tax bills in full and on time to avoid penalties, general interest charges (GIC) and firmer actions. However, if you’re experiencing financial difficulties you may be eligible to set up a payment plan.
A payment plan allows you to break down your payment into smaller amounts that are made via instalments and are spread over the shortest possible fixed period of time. When you set up a payment plan, you pay an agreed sum of money weekly, fortnightly or monthly until the balance is cleared.
Tax debts on a payment plan continue to accrue GIC, which compounds daily. Paying your debt in the shortest period of time will help reduce the GIC that you’ll pay.
Who can set up a payment plan
Payment plans are available to eligible:
- individuals
- sole traders
- businesses
- registered tax or BAS agents on behalf of their clients.
We consider many factors when you apply to set up a payment plan. Depending on the circumstances, you may not be eligible for a payment plan on the terms you suggest or at all. If you have not been successful in setting up a payment plan online or through our automated phone service, you will need to phone our lodge and pay enquiry line during operating hours to discuss your eligibility.
Before setting up a payment plan
Before setting up a payment plan you should consider:
- if you can pay what you owe today - this will reduce how much GIC you pay
- how much you can pay today, and when you'll be able to pay in full.
Use our online payment plan estimator to calculate a payment plan you can afford. This tool also helps 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 pay.
Once you work 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 debts.
You can't use this estimator for super guarantee charge debts. To get help managing your super obligations, you can phone our lodge and pay enquiry line.
You should also be aware:
- you still need to lodge your obligations and pay any associated liabilities on time
- you must factor in payment of your ongoing obligations, in addition to any payment plan
- if you have multiple overdue tax debts, you will need to pay any other tax debt in full or set up payment plans to avoid defaulting or debt recovery action
- any tax credits and refunds you receive will be used to reduce your tax debt (offsetting) – this will not replace the required instalment payment
- you can make additional voluntary payments or pay off the debt at any time.
Setting up a payment plan
There are a few ways to set up a payment plan. Your registered tax or BAS agent may also be able to set a payment plan up on your behalf.
Online services
If you owe $200,000 or less, you may be able to set up a payment plan through our online services.
If you are an individual (including a sole trader), you can use online services. You will need an active myGovExternal Link account linked to the ATO.
Businesses can use Online services for businessExternal Link by selecting Accounts and payments, then payment plans.
When you set up a payment plan, we will help you save on interest by guiding you to pay what you owe in the shortest time. We will provide you with:
- an upfront amount you need to pay
- suggested 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.
Self-help phone line
If you owe $200,000 or less, you may also be able to use our self-help service for individuals and sole traders or automated service for business enquiries. You will need your Australian business number (ABN) or tax file number (TFN) handy, and the full details of the amount payable.
Contacting us
If you owe more than $200,000 or are unable to set up a payment plan online, you will need to contact us during operating hours for assistance.
You will need your ABN or TFN handy, and the full details of the amount payable. We will ask for more detail about your circumstances, including:
- why you can't pay by the due date
- your bank details, including current account balances and any lines of credit
- your income, including if it can meet the proposed payment plan
- expenses
- assets.
To prepare for this conversation, you can visit Moneysmart.gov.auExternal Link and use their budget plannerExternal Link. This can help you understand your financial position so you can make a suitable payment proposal.
We will ask further questions about your circumstances if you have:
- received a warning of firmer recovery or legal actions in the past 6 months or have progressed with these actions
- defaulted on or cancelled 2 or more payment plans in the past 12 months
- requested additional support due to significant financial hardship.
Registered agents
If you're a registered tax or BAS agent, you can use our Online services for agents to view, set up, adjust or cancel a payment plan for your client if they:
- owe $200,000 or less
- does not already have a payment plan for that debt amount.
This video explains how to set up a payment plan for your client.
If your client does not meet these requirements, you can phone our registered agent phone line to discuss their options. Use our fast key code guide to get in touch with the right area.
Interest-free payment plans for overdue activity statement amounts
Small businesses that owe activity statement amounts may be able to make interest-free payments over 12 months.
Eligibility
You may be eligible for an interest-free payment plan if your business:
- has an annual turnover of less than $2 million
- has recent amounts owed from an activity statement of $50,000 or less that have been overdue for up to 12 months
- has a good payment and lodgment history, including
- no more than one payment plan default within the last 12 months
- no outstanding activity statement lodgments
- cannot obtain finance (such as a loan) through normal business channels
- can demonstrate ongoing viability.
How it works
You must agree to a payment plan that allows the amounts owed 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 your bill, you:
- can check your running account balance by logging into the Online services for businessExternal Link or phoning our business enquiry line
- must meet all of your other payment and lodgment obligations.
Registered tax or BAS agents can check the running account balance by:
- using Online services for agents or by referring to the Online services for agents user guide for instructions
- phoning our registered agent phone line
- phoning 13 72 86 (Fast Key Code 1 2 5 1).
If you're already in a payment plan
You can ask us to change your existing payment plan to an interest-free payment plan if you satisfy the eligibility criteria.
If your request is approved, we’ll cancel your previous plan. The interest-free period will start from the date you enter into the new plan.
Phone our business enquiry line during operating hours to change to an interest-free payment plan if eligible.
Managing your payment plan
Setting up direct debit
The easiest way to stay on top of your payment plan instalments is to set up a direct debit. You can set up direct debit payments at the same time you set up your payment plan – from either a financial institution (bank) account or a credit or debit card (a card payment fee will apply).
Only the card holder can set up a direct debit payment plan using a credit or debit card. Alternatively, you can pay individual instalments with your credit card or any of the other payment options available for paying the ATO.
Modifying instalments and changing how you pay
You can modify an instalment from direct debit to a different payment method (including, from one credit or debit card and linking it to another card). You can also modify an instalment date or amount or cancel an instalment.
If you make any changes, you will need to do this at least:
- one business day before the instalment date, if the payment method is direct debit via credit or debit card
- 3 business days before the instalment date, if the payment method is direct debit via your bank accounts.
A payment plan cannot be modified online if the current plan extends for longer than 24 months or if the changes will extend the plan by longer than 24 months.
You can update the instalment amounts of your payment plan through our online services:
- individuals and sole traders can use ATO online services
- businesses can use Online services for businessExternal Link on the Payment Plan page
- tax and BAS agents can refer to the Online services for agents user guide for instructions on how to modify an instalment in Online services for agents.
Tax and BAS agents cannot modify the payment plan or instalment schedule if the payment method is direct debit via credit or debit card. Only the card holder can do this.
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, select Payment and then select Payment Plans from the next menu.
Businesses can check their payment plan status from the Accounts and Payments menu in Online services for businessExternal Link. For more detail about each payment plan status, click the help icon.
Arrears status
If you missed a scheduled instalment 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 us informing you that your accounts are in arrears, and you have an opportunity to catch up before your payment plan defaults. This letter outlines the minimum amount you need to pay now and other actions you need to take to prevent your payment plan from defaulting.
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 them.
Secured payment plans
If we can't reach an agreement with you about paying amounts you owe, we may consider accepting an offer of security where you either:
- request we defer the time of payment of a debt
- seek to pay a debt by instalments.
Our preferred securities are:
- a registered mortgage over freehold property
- an unconditional bank guarantee from an Australian bank.
For more information about a secured payment plan, phone our lodge and pay enquiry line during operating hours.
For more information, see PS LA 2011/14 General debt collection powers and principles.