Setting up an ATO payment plan

Need to pay your tax bill but struggling to work out how you’re going to pay it off in time? We know this can be stressful. If you find yourself in this situation, we’re here to help.

Can’t pay your tax bill in full? You may be eligible to set up a payment plan. This will allow you to pay in instalments over time, ideally over the shortest possible period.

This article explains how to manage your tax debt with a payment plan, including how to check if you’re eligible for an ATO payment plan. Keep in mind, payment plans accrue interest. So, if you’re able to pay in full and on time, it’ll save you from paying extra in interest in the long run.

Tax bill caught you off guard? We’ve explained some of the reasons why you might receive a tax bill in our article.

How do I set up an ATO payment plan?

If you’re experiencing financial difficulties and need to set up a payment plan, the easiest way is to use our online services.

You may be able to set up a payment plan online if:

• You don’t already have an active payment plan on the same account.

• Your tax account isn’t on hold. For example, from being in insolvency or lodging a dispute.

• The amount you owe is between $1 and $200,000.

Check out our info before you set up a payment plan this opens in a new window .

Don’t forget - payment plans accrue interest. If you can pay in full and on time, it’ll save you in the long run!

To set up a payment plan online, you’ll need to have your ATO account linked to your myGov.

From the menu select Tax > Payments > Payment plans. This will bring up the 'Payment plans' screen allowing you to select the button to Add a payment plan.

Online services for business can also be used to set up a payment plan. Details can be found under Accounts and payments menu this opens in a new window 

If you can’t set up a payment plan online, you will need to contact us.

How much do I pay and how often?

We have a handy payment plan estimator this opens in a new window  to help you work out what you can afford. You can also use the Money Smart budget planner this opens in a new window  to help understand your overall financial position.

When you set up your payment plan you can set up payments to be weekly, fortnightly, monthly, or pay a lump sum.

To start your payment plan you’ll need to make an up-front payment followed by regular instalments. To keep you from paying too much interest, complete your payment plan in the shortest possible timeframe that fits with your circumstances.

If I have an ATO payment plan, will my tax refund be used to pay off the debt?

Yes. If you’ve got a debt with us, we’re required by law to use any credits or refunds to pay off or reduce what you owe. Keep in mind, this won’t replace your required payment plan instalments.

In some cases, we can also use credits you get from other government agencies to pay off your debts.

In some circumstances we’ll also use your refund to pay other Australian Government agencies if you owe them money.

If there are any credits left over once all your debts are paid, we’ll refund them to you.

How can I change an existing ATO payment plan?

The same way you’ve set it up – by heading online to use our online services this opens in a new window .

When you view your payment plan online, you can choose the option Update payment plan. This allows you to change the date and/or the amount for each instalment.

If you want to modify a payment date, amount or cancel an instalment online you’ll need to do this:

• 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.

Sometimes modifying a payment plan isn’t an option. In that case you may have to cancel your existing payment plan and start a new one. If you do this online, you may have to make another upfront payment.

Note: you won’t be able to make changes online if your current plan is longer than 24 months, or if the changes will extend the plan more than 24 months.

Can I change the payment method used for my ATO payment plan online?

Yes, you can manage your payment plan online this opens in a new window . You can change from direct debit to another method. Remember to allow at least 3 business days for the request to process.

You can also unlink your payment plan from one credit or debit card to another.

Why isn't my extra payment showing up on my ATO payment plan?

Our systems aren't instant. They don't check for payments before the due date. It should be visible on your statement of account but won't deduct from your payment plan until your regular payment date.

If you make a payment over the Christmas period, it won't process until we return in the new year. Don't worry, we don't count this as a late payment.

What should I do if I've missed a payment on my ATO payment plan?

We recommend setting up direct debits to pay your due amount a couple of days early to avoid missing a payment. Prefer manual payments? You can set up SMS reminders when you start your payment plan.

If it's a single payment that's defaulted, your account may show up as in arrears. You can make a catch-up payment before your next payment is due.

Does the ATO charge interest on payment plans?

Yes, that's why we encourage you to pay in full and on time if you're able to.

General interest charge (GIC) will start accruing from when your original bill was due. To minimise how much GIC you'll need to pay, it's best to complete your payment plan in the shortest timeframe you can.

To learn how we work this out, check out our info on GIC rates this opens in a new window .

What happens to my ATO payment plan when I've paid my tax bill?

Good news! Your payments will stop automatically from our end. If you have direct debits set up, you should cancel those with your bank.

Our systems may take some time to show your plan as paid off. Don't worry, we don't charge interest after you've made your final payment.