If you owe tax, but are worried about being able to pay it on time, contact the Australian Taxation Office (ATO) on 13 11 42 as soon as possible. It is still important to lodge your tax return or business activity statements (BAS) on time even if you know you can’t pay the tax. This avoids late lodgement penalties and shows you are trying to meet your obligations.
Depending on your circumstances, the ATO may decide to give you more time to pay or agree to one of the measures described below.
Topics on this page:
- Pay your tax debt by instalments
- Ask for interest charges to be reduced
- Apply for a release of your tax debt
Pay your tax debt by instalments
If you have a tax debt and you cannot pay it in full, you may be able to pay by weekly, fortnightly or monthly instalments.
How to apply
Depending on the amount you owe, there are different ways to make a new payment arrangement with the ATO. Whichever method you choose, have your tax file number (for income tax debt) or Australian business number (ABN, for activity statement debt) ready.
- Tax debt of less than $25,000 – Call the automated phone service on 13 28 65 (individuals) or 13 72 36 (businesses) and follow the prompts. You can suggest a payment arrangement, and if the ATO accepts it, they will send you a confirmation letter within 15 days.
- Income tax debt of less than $50,000 – Use the online service at my.gov.au and link your myGov account to ATO. (MyGov is a secure way to connect various government services – you can create a new account if you don’t have one already.)
- Activity statement debt over $25,000, or income tax debt over $50,000 – Call 13 11 42 to speak to someone at the ATO. They will ask about your financial situation, such as why you haven’t been able to pay and how you plan to pay the debt.
For further details about paying your tax debt by instalments, visit ato.gov.au, or ask a financial counsellor to help you.
Ask for interest charges to be reduced
The ATO usually charges interest on unpaid tax debts. This General Interest Charge (GIC) applies from the original due date, even if you enter into a payment arrangement. If you are facing financial difficulties because of cancer, you can ask for some or all of the GIC to be waived. This is known as the remission of GIC.
How to apply
Contact the ATO on 13 11 42 and explain why your payment was delayed and any steps you took to avoid the delay. For larger amounts, you may be asked to put your request in writing.
Apply for a release of your tax debt
You can apply to be released from some tax debts if paying the debt would cause serious hardship. You will need to show that it would leave you unable to provide food, housing, medical treatment or other necessities for yourself or your family.
How to apply
To apply to be released from your tax debt, you need to complete a detailed form (available from ATO on 13 11 42) and provide documents such as pay slips and bank statements. A financial counsellor or accountant can help with this application.