How do ATO payment plans work for businesses?

An ATO payment plan lets you pay a tax debt in weekly, fortnightly or monthly instalments until it is cleared. It can take pressure off your cash flow, but it isn’t free: interest keeps applying until the debt is paid.

Who can get a payment plan

The ATO says that if you are experiencing financial difficulties, you may be eligible to set up a payment plan. It considers many factors when you apply. It expects you to pay the debt over the shortest possible fixed period.

While you are on a plan, the ATO says you must:

• lodge all your obligations on time
• pay any new tax debts in full and on time, or set up a separate payment plan for the new debt.

Your income tax account and your activity statement account need separate payment plans.

Online self-serve limits

The ATO sets these limits for setting up a plan yourself:

• Amount: if you owe $200,000 or less, you may be able to set up a plan through online services or the self-help phone line.
• One at a time: you can only set up one payment plan at a time using online services or the self-help phone line.
• Term: if you need a repayment timeframe beyond 2 years, you need to phone the ATO.

The ATO says you need to phone its lodge and pay enquiry line if you:

• owe $200,000 or more
• tried to set up a plan online or through the self-help line and it wasn’t accepted
• need to re-negotiate an existing plan
• need extra support because of significant financial hardship
• are insolvent, bankrupt or in dispute
• need more than 2 years to pay
• received a warning of firmer recovery or legal action in the past 6 months
• defaulted on or cancelled 2 or more payment plans in the past 12 months.

Step by step

1. Lodge anything outstanding. The ATO expects your lodgements to be up to date while you are on a plan.
2. Have your details ready. You need your ABN, the full amount owing for each debt (don’t combine different debts) and the current account details from your latest ATO notice or online services.
3. Choose a channel.
   • Online services for business: log in, select Accounts and payments, then Payment plans.
   • Automated phone service for business enquiries: available if you owe $200,000 or less.
   • Your registered tax or BAS agent: the ATO says your agent may be able to set up a plan for you.
4. Pick your instalments. The ATO suggests instalment amounts based on similar circumstances. You can adjust them within set limits.
5. Set up direct debit. You can set up a direct debit from a bank account or debit card at the same time. The ATO says there are no card payment fees for debit card payments.
6. Keep up with new obligations. Lodge and pay new amounts on time so the plan stays on track.

If you can’t set up a plan online, phone the ATO’s lodge and pay enquiry line on 13 11 42.

Interest (GIC) while on a plan

The ATO says tax debts on a payment plan continue to accrue general interest charge (GIC), which compounds daily. The longer the plan, the more interest you pay.

The ATO updates the GIC rate quarterly and publishes it on its GIC rates page. It generally announces the next quarter’s rate 2 weeks before the quarter starts.

GIC is no longer tax deductible. The ATO says any GIC incurred on or after 1 July 2025 is not deductible, even if the debt relates to an earlier income year.

Interest-free plans for some small businesses

The ATO offers interest-free payment plans for some small businesses with overdue activity statement amounts. The business must:

• have an annual turnover of less than $2 million
• have recent activity statement amounts of $50,000 or less that have been overdue for up to 12 months
• have a good payment and lodgement history, including no more than one payment plan default in the last 12 months and no outstanding activity statement lodgements
• be unable to get finance (such as a loan) through normal business channels
• be able to show ongoing viability.

The plan must allow the amount to be paid by direct debit within 12 months. GIC is still charged, but the ATO says it is automatically remitted as long as you keep to the plan. To ask about this, contact the ATO’s business enquiry line.

Changing your plan

You can change your instalments in ATO online services if your plan is under 24 months, or if the change won’t extend it beyond 24 months. Otherwise, contact the ATO. The ATO asks for changes at least one business day before a card payment is due, and 3 business days before a direct debit from a bank account.

What happens if you miss a payment

If you miss an instalment, or don’t pay another tax obligation by its due date, your plan may move into arrears. The ATO sends an arrears letter telling you the minimum amount you need to pay now and what to do to stop the plan defaulting.

If the plan defaults, the ATO says the whole overdue balance becomes immediately payable and it may take firmer action. If that happens, contact the ATO to discuss your options, which may include re-negotiating a plan.

Plans for larger debts

If you owe $200,000 or more, or need longer than 2 years, phone the ATO’s lodge and pay enquiry line. The ATO will ask about your:

• income
• bank details and account balances
• expenses
• assets.

If the ATO can’t reach agreement with you, it may consider an offer of security, where you ask it to defer payment or accept instalments. Its preferred securities are a registered mortgage over freehold property or an unconditional bank guarantee from an Australian bank.

A registered tax agent can help you prepare the information the ATO asks for.

Important things to know

• Keeping to a plan protects you from credit reporting. The ATO says it won’t report your business tax debt to credit reporting bureaus if you are engaging with it, including by having an active payment plan you are complying with.
• A plan doesn’t pause interest. Factor GIC into what the debt will really cost you.
• New debts need attention too. Missing a new BAS payment can push your plan into arrears.
• A plan isn’t listed as a way to remit a director penalty. For company directors, the ATO’s list of ways to remit a director penalty doesn’t include a payment plan. See what is a director penalty notice.
• Compare options with your adviser. Talk to your accountant or registered tax agent about whether a plan suits your cash flow. For the wider picture, see what happens if you can’t pay the ATO.