If you owe the Australian Taxation Office and can’t pay by the due date, you can set up an ATO payment plan to spread the balance across weekly, fortnightly, or monthly instalments. For debts of $200,000 or less, individuals, sole traders, and businesses can arrange it themselves in minutes through myGov, Online Services for Business, or the ATO’s self-help phone line. Larger debts have to be negotiated directly with an ATO officer. Interest keeps building on the unpaid balance the entire time, so the sooner you set the plan up and the shorter you make it, the less the debt costs you.
Who Can Set One Up Themselves
The self-service option is open to individuals, sole traders, and businesses whose total debt is $200,000 or less.1Australian Taxation Office. Setting up a payment plan It covers most common tax types, including income tax and activity statement liabilities. If you’ve been lodging on time and don’t have other outstanding obligations, the automated system is more likely to accept your proposed terms without extra questions.
Owe more than $200,000? You’ll need to phone the ATO and work with a case officer who reviews your financial position before approving anything.
Employers behind on superannuation guarantee obligations can also arrange a plan for the Super Guarantee Charge, but only after lodging an SGC statement. The online estimator doesn’t handle SGC debts, so you have to contact the ATO to negotiate those terms directly.2Australian Taxation Office. Missed and late super guarantee payments
What to Have Ready Before You Start
Pull a few things together first. You’ll need your Tax File Number (individuals) or Australian Business Number (businesses) to verify your identity. Confirm your exact debt balance from your most recent notice of assessment or from your ATO online account, where past notices sit under the communications tab.
Run your numbers through the ATO’s payment plan estimator, in the Calculators and Tools section of the ATO website.3Australian Taxation Office. Payment plan estimator Enter your debt and a payment frequency, and it shows the interest you’d pay under each option. Shorter plans mean less interest, so it’s worth testing a few instalment amounts to find one you can sustain without defaulting. The ATO may ask for an upfront payment as part of the arrangement, and a larger upfront amount noticeably reduces the total interest.
Have a rough picture of your income and essential expenses too. Propose an instalment you can actually meet each period. Setting the bar too high and missing a payment is worse than starting slightly lower and paying reliably.
Setting Up the Plan Online
Individuals and sole traders work through ATO online services, accessed via a myGov account linked to the ATO. Once you’re in, go to Tax, then Payments, then Payment plans.1Australian Taxation Office. Setting up a payment plan The screens walk you through choosing the tax account, entering your instalment amount, picking a frequency, and confirming.
Businesses use Online Services for Business instead. The path is Accounts and payments, then Payment plans. The interface is similar and produces a confirmation with a reference number once you accept.
Setting Up the Plan by Phone
If you’d rather not use the portal, call the self-help line. Individuals and sole traders call 13 28 65. Businesses call 13 28 66. Follow the voice prompts to enter your identification details and proposed payment schedule. The system reads back a summary for you to confirm and gives you a reference number to keep.
How You Pay Each Instalment
You’re not locked into one method. The ATO accepts instalments by direct debit from a bank account, debit or credit card, electronic funds transfer, BPAY, Government EasyPay, and in person at Australia Post.4Australian Taxation Office. Other payment options Direct debit is usually safest because it happens automatically and you can’t forget a due date. Watch your account balance though: if a direct debit fails for insufficient funds, the missed payment can default the whole plan.
You can make voluntary extra payments at any time to pay down the debt faster. Any refunds or credits you become entitled to will be offset automatically against your outstanding debt, but that offset doesn’t replace your scheduled instalment for the period.5Australian Taxation Office. Payment plans
Interest Keeps Running While You Pay
The General Interest Charge applies to your unpaid balance every day the debt is outstanding, and it compounds daily.6Australian Taxation Office. General interest charge Being on a payment plan does not pause or reduce it. For the April–June 2026 quarter, the annual GIC rate is 10.96%.7Australian Taxation Office. General interest charge (GIC) rates The ATO recalculates the rate each quarter using the 90-day bank bill rate plus an uplift factor set out in Section 8AAD of the Taxation Administration Act 1953.
At that rate, a $20,000 debt accrues roughly $6 a day in interest. Over a 12-month plan, you’d pay more than $1,200 in interest on top of the original balance. That’s why the ATO pushes you to pay in the shortest window you can manage, and why the estimator is worth running before you lock in a schedule.
Keeping the Plan Active
Setting it up is the easy part. Keeping it alive takes two habits: every instalment on time, and every other tax obligation kept current.
You have to keep lodging every return and activity statement by its due date, even when you can’t pay the new liability in full. If a new debt arises from a freshly lodged return, either pay it straight away or set up a separate payment plan for that amount. A missed instalment or a late lodgment can default the whole plan, and the full overdue balance then becomes immediately payable.5Australian Taxation Office. Payment plans
If your circumstances change, adjust the plan through the same online portal or phone line you used to set it up. You might raise payments if your income improves, or contact the ATO about easing them if things get tighter. Simply stopping payments is the worst move. The ATO can escalate to firmer action, including garnishee notices against your bank accounts or wages, with employers directed to withhold up to 30 cents in the dollar from your after-tax pay.8Australian Taxation Office. Garnishee notice
If You Can’t Afford Any Instalment
A payment plan assumes you can afford to pay something each period. If paying would leave you unable to cover food, housing, medical care, or education, you may be eligible for a full release from the debt under the serious hardship provisions in Section 340-5 of Schedule 1 to the Taxation Administration Act 1953. Hardship release is limited to individuals and to certain tax debts, and it requires detailed financial disclosure.
Where the situation falls short of serious hardship but you still can’t realistically pay in full, the ATO may accept a compromise: a lesser lump sum or arrangement to settle the debt, with the balance written off.9Australian Taxation Office. Compromise of tax debt The bar is high: the debt has to be undisputed, your offer can’t be less than your total net assets, and the ATO must be satisfied other collection methods wouldn’t recover more. Both routes are last resorts rather than shortcuts around setting up a standard plan.