From time to time business and individuals may be unable to pay their tax debt in full and on time due to financial and other difficulties. If you are in this situation you need to make contact with the Australian Taxation Office (ATO) as soon as possible to make arrangements with them to repay the tax debt. By addressing the debt early you can prevent it becoming more difficult to manage or the ATO taking harsher action against you to recover the debt.
What information do you need to make a payment arrangement?
1. Your Tax File Number or ABN
2. The amount outstanding
3. Work out how much you can pay on a weekly, fortnightly or monthly basis or as a lump sum
4. Determine a date for your first payment to start
Once you are geared with this information you will need to get in contact with the ATO to negotiate the terms and have the Payment Arrangement put in place.
How do I contact the ATO for a Payment Arrangement?
If the debt is less than $25,000 you can make a Payment Arrangement with the ATO by calling their self-help service on 13 72 26 for Business or 13 28 65 for Individuals.
If the debt is $25,000 or more for Business you can submit a request via the Tax Office Business Portal or alternatively phone 13 11 42.
If the debt is $25,000 or more for Individuals you can use the ATO online services for individuals or alternatively phone 13 11 42.
What happens if I default on the Payment Arrangement?
Once an arrangement has been accepted it is important to pay all instalments and new tax liabilities as they arise, on time and in full. Not meeting these conditions will cause the arrangement to default. If you default on a payment arrangement, there may be more stringent requirements imposed before the ATO will agree to a new arrangement or payment could be demanded in full immediately.