Payment plans

What is a payment plan?

If you can't pay what you owe in full and on time, you may be able 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 to minimise general interest charge (GIC) which will continue to accrue. Within a payment plan, you pay 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
• registered tax or BAS agents on behalf of their clients.

Important information for taxpayers entering a payment plan

Before entering into a payment plan you need to be aware of the following:

• If you can, you should pay the tax you owe in full and on time.
• If you have multiple overdue tax debts, your payment plan may default and you will need to pay any 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) - it doesn't replace the required instalment payment.
• 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.

What to do before setting up a payment plan

When thinking about setting up a payment plan you need to consider:

• if you can pay the tax debt you owe then you should pay in full now
• how much you can pay now and when you'll be able to pay in full
• negotiating payment plans for all debts
• how much you can pay to meet each scheduled instalment (including interest on any overdue amounts)
• your future obligations.

You can 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 need to 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.

Setting up a payment plan

In some circumstances you will be able to set up a payment plan online, without our assistance.

Sometimes you may still need to contact us for assistance, even if the payment plan estimator indicates you have found a suitable arrangement. We may ask for more detail about your circumstances, including about:

• why you can't pay now
• what steps you've taken to try and pay
• your income, such as  
  • employment
  • interest
  • rent
  • royalties
  • dividends
• your expenses, such as  
  • transport
  • groceries
  • gas, electricity and water bills
  • recreation and entertainment costs
  • insurance
  • financial (for example credit cards, personal loans)
  • clothing and personal care
  • education and childcare
  • TV, phone and internet
  • minimum mortgage repayments or rent
• your assets
• your bank balances, creditors and debtors.

If you are in business, we 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.

We ask for this information so we can work with you to create an appropriate and manageable payment plan.

Individuals and sole traders

The easiest way to set up a payment plan if you owe $200,000 or less is to use our online services. To use online services, you need an active myGovExternal Link account linked to the ATO.

You may be eligible to set up, adjust or cancel an existing payment plan.

If you can't access online services via myGov, you can phone our self-help service for individuals. 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.

If you have trouble using our automated phone service, you’ll be connected to a person to help you during operating hours.

Our 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 amount 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 $200,000, phone our lodge and pay enquiry line during operating hours to discuss your options.

Before you call, work out a plan you can afford using our payment plan estimator.

Businesses

If your business owes $200,000 or less, you can set up a payment plan:

• via Online services for businessExternal Link – select Accounts and payments then payment plans
• by phoning our automated service for business enquiries
• 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 our automated phone service, you'll be connected to a person who will help you during operating hours.

To set up a payment plan, you need your ABN or TFN, and the full details of your outstanding amount.

If your business owes over $200,000, phone our lodge and pay enquiry line during operating hours to discuss your options.

Before you phone, work out a plan you can afford using our payment plan estimator.

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.

This video explains how to set up a payment plan for your client.

You can set up a payment plan if your client:

• has an existing debit amount less than $200,000 (total balance or overdue amounts)
• does not already have a payment plan for that debit amount.

If your client doesn’t 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.

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.

Changing how you pay your instalments

You can modify an instalment from direct debit to a different payment method.

When updating a payment plan, you can change the payment method by:

• choosing a different payment method (you must allow at least one business day to process this request)
• unlinking the payment plan from one credit or debit card and linking it to another card.

Modifying instalments

You can also modify an instalment date or amount or cancel an instalment.

You will need to do this at least 2 days before the payment date. 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.

Business clients 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, phone our lodge and pay enquiry line during operating hours.

For more information, see PS LA 2011/14 General debt collection powers and principles.

How to set up a manageable payment plan to pay down your debt.