How Do I Organise an ATO Payment Plan?

Payment plans are a very common way of meeting tax obligations. All kinds of situations can arise between BAS payments or end of year tax bills that make it hard to hard over thousands in one hit. Here’s everything you need to know about ATO payment plans…

What is an ATO payment plan?

An ATO payment plan is a financial assistance arrangement allowing repayment of any existing debt with the ATO over a period of time in instalments rather than upfront in one hit. A payment plan has a set amount that is to be paid weekly, fortnightly or monthly.

Who is eligible for an ATO payment plan and what is the criteria? 

Anyone who has a debt with the ATO is eligible to enter a payment plan, however there are certain circumstances where they’ll request further information before approving it. For example: 

• If you have a debt over $100,000 
• If you’ve had payment arrangements default in the past 

If either of these two scenarios are the case, the information requested by the ATO will be as per below: 

• Monthly income including;
  • employment
  • interest
  • rent
  • royalties
  • dividends
    
• Monthly expenses such as:
  • transport
  • groceries
  • gas, electricity and water bills
  • recreation and entertainment costs
  • insurance (financial planning)
  • financial (for example, credit cards, personal loans)
  • clothing and personal care
  • education and childcare
  • TV, phone and internet
  • minimum mortgage repayments or rent

• Total value of assets
• Bank balances

In addition, if you’re in business and those two scenarios apply you’ll need to provide the following: 

• 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
  • creditors and debtors

Why pay my tax upfront when I could go on a payment plan?

It’s always best to pay upfront and on time! It eliminates the risk of general interest charges (the ATOs interest charges on unpaid debts). The General Interest Charge rate is reviewed by the ATO quarterly however is calculated on a daily compounding basis on all outstanding debts. The current rate of GIC Annual Rate is charged at 8%. Ideally, you don’t want your debt to increase further.

How do I organise an ATO payment plan?

We can assist in the negotiation of a payment plan on your behalf for a fee from $150.00 plus GST. Alternatively, you can contact the Australian Taxation Office directly using the following contact details:

• Individuals 13 25 68
• Business line (if your debt does not exceed $100,000.00) 13 72 26 
• Businesses (debt exceeding $100 000) 13 11 42

Why do we charge for this service? 

Because we do a lot more than click a couple of buttons. The first step when establishing the payment arrangement is to communicate with you as to affordable repayment amounts, initial deposit amount, preferred payment frequency and payment method. 

The team will then review your current financial situation, collect all data required to provide to the ATO as well as forecast upcoming payment obligations to the ATO to ensure the repayments will remain affordable. 

By committing to a payment arrangement that is not only affordable now but also in the future, the chance of the payment arrangement defaulting is minimised meaning that:

1. The ATO will be happy to grant you a payment arrangement in the future if required; and 

2. There will not be further fees incurred due to the need to renegotiate the payment plan 

Once the payment arrangement has been successfully established, we will ensure you have everything you need to commence payments including a payment plan schedule and payment slip.

A couple of other bits to know about…

• Any tax credits and refunds you receive while there is an existing ATO debt will be used to offset your tax debt. The offsetting of your tax debt does not replace the required installment payments and the ongoing repayment schedule will remain active 
• 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
• If you miss lodging on time (eg your BAS) during the payment plan, then it will default

Questions? Concerns? Need a payment plan. Find us here.

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