Negotiating a payment arrangement with the Australian Taxation Office (ATO) can be a crucial step for individuals or businesses facing difficulty in paying their tax debts on time. The ATO generally shows a willingness to work with taxpayers to manage their debts. Here is a guide on how to effectively arrange a payment plan with the ATO:

Understanding Your Situation

  • Assess Your Debt: Know exactly how much you owe, including primary tax debts and any interest or penalties.
  • Review Your Finances: Understand your financial situation to determine what you can realistically afford to pay.


  • Gather Documentation: Prepare financial statements, cash flow projections, and other relevant documents that support your case.
  • Formulate a Proposal: Based on your financial assessment, devise a realistic payment plan proposal. This should include how much you can pay upfront and the frequency of ongoing payments.

Contacting the ATO

  • Initial Contact: You can contact the ATO via phone or through their online services. Smaller debts might be managed directly online.
  • Discuss Your Situation: Be open and honest about your financial hardship. Clearly explain why you are unable to pay the debt in full and how you plan to address it.
  • Present Your Proposal: Offer your proposed payment plan. Be realistic in your commitments.


  • Flexibility: Be prepared to negotiate. The ATO might counter-offer with a different payment schedule.
  • Interest and Penalties: Discuss the possibility of reducing or remitting any interest and penalties associated with your debt.
  • ATO’s Considerations: The ATO will consider your past compliance history, current financial situation, and the likelihood of future compliance.


  • Formalising the Plan: Once an agreement is reached, the ATO will formalise the payment plan. Make sure you understand the terms, including any interest charges.
  • Written Confirmation: Request written confirmation of the payment plan and keep it for your records.


  • Adherence to the Plan: Stick to the agreed payment schedule. Failing to meet the terms can result in the cancellation of the arrangement and the full debt becoming due.
  • Communication: If your circumstances change and you can’t meet the payment terms, contact the ATO immediately to discuss your situation.

Tips for Success

  • Act Early: Don’t wait until your debt is unmanageable. Contact the ATO as soon as you realise you might have trouble paying.
  • Be Honest and Realistic: Overcommitting can lead to further issues. It’s important to be honest about what you can afford.
  • Maintain Compliance: Continue to meet your ongoing tax obligations throughout the period of your payment plan.

Arranging a payment plan with the ATO is about clear communication and realistic commitments. The ATO is often open to working with taxpayers to manage their debts, but it’s essential to maintain honesty, transparency, and compliance throughout the process. Remember, dealing with tax debts proactively can prevent them from escalating into more serious financial problems.