If you have a tax bill that you are struggling to work out how you’re going to pay it off in time, an ATO payment plan may be an option for you. This means paying instalments spread over the shortest possible period of time.

Here are some of the biggest questions about an ATO payment plan, answered:

I’m interest in setting up a payment plan. Am I eligible?

To set up a payment plan, you’ll need to meet the following criteria:

• The amount you owe is between $1 and $200,000
• You don’t already have an active payment plan
• Your tax account isn’t on hold

Don-t forget – Payment plans accrue interest. So, if you can pay in full and on time, you’ll save in the long run.

How much do I pay and how often?

That depends on what’s doable for you. The ATO has a handy payment plan estimator to help you work this out. You can also use the MoneySmart budget planner 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, you should complete your payment plan in the shortest possible timeframe that fits with your circumstances.

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

Yes. If you’ve got a debt with this ATO they are 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, the ATO can also use credits you get from other government agencies to pay off your debts. There are some circumstances they will also use your refund to pay other Australian Government agencies if you owe them money.

If there’s any credits left over once all your debts are paid, the funds will then be refunded to you.

How do I set up a payment plan online?

This is a service we can provide to you, where we will contact the ATO on your behalf and establish the payment plan. But if you’re experiencing financial difficulties and prefer to set the plan up yourself, the easiest way is to use online services.

How can I change an existing payment plan?

The same way you’ve set it up – either through us or using online services.

Now – a little advice. If you’re wanting to modify a payment date, amount or cancel an instalment online you’ll need to do this at least 3 days before the next instalment is due. Sometimes modifying a payment plan will not be an option available. 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.

You can’t have more than one payment plan at a time. If you owe another amount, you’ll need to either pay this off separately or contact us to chat about your existing plan.

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 payment plan online?

Yes, you can manage your payment plan online. 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.

I made an extra payment. Why isn’t this showing up on my payment plan?

The ATO’s systems are not instant. They do not 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 the ATO returns in the new year. But this does not get counted as a late payment.

I missed a payment, what do I do?

The ATO recommends 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.

Am I being charged interest on my payment plan?

Yes, that’s why it is encouraged that you pay your debts in full and on time if you’re able to.

The 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.

I’ve finally paid my tax bill off! What happens at the end of my payment plan?

Your payments will stop automatically from the ATO’s end. If you have direct debits set up, you should cancel those with your bank.

The ATO’s systems may take some time to show your plan as paid off. Don’t worry, the ATO won’t charge interest after you’ve made your final payment.