How to Effortlessly Manage and Create Payment Plans with the ATO

Addressing tax obligations with the Australian Tax Office (ATO) can be a complex task, particularly when facing challenges in paying off the full amount owed. In order to effortlessly create and manage a payment plan, I've highlighted the key considerations below.

Before Initiating a Payment Plan:

1. Determining Eligibility: The ATO has specific criteria for initiating a payment plan. Online setup is available for debts below $100,000, while amounts exceeding this threshold require a phone negotiation.

2. Negotiating a Feasible Plan: Work collaboratively with the ATO to establish a payment plan that suits both the ATO and yourself. The ATO typically prefers plans that resolve outstanding debts within 12-24 months. Presenting a well-thought-out plan before contacting the ATO demonstrates commitment and can influence favourable terms.

During the Payment Plan Schedule:

1. Critical Consideration for Ongoing Obligations: It is crucial to understand that a payment plan solely addresses existing debt and does not encompass future Business Activity Statements (BAS) or tax lodgement debts. Any new obligations arising during the plan period must be paid separately and in full.

2. Adhering to the Agreed Terms: Once a payment plan is in place, strict adherence to the agreed terms is imperative. Failure to comply results in defaulting on the plan, reverting the debt to overdue status. This triggers renewed ATO contact and complicates future negotiations.

3. Consequences of Default: Defaulting on a payment plan poses significant challenges. Re-establishing a similar plan becomes difficult, with the ATO adopting a more stringent stance on terms. Defaulting not only reinstates the original debt status but also leads to increased scrutiny and potential harsher consequences.

4. You have extra cash? You can make additional voluntary payments or pay off the debt at any time.

In dealing with the ATO and negotiating a payment plan, be proactive, address the reasons you need assistance and create a plan that will ensure your debt will be paid off on an agreed timeframe. You can set up direct debit or remember to make payments of the instalments to avoid defaulting on the payment plan. If you require assistance, please do not hesitate to contact Tru Advisory.