Get on top of your tax debt

Who it is for

• Individuals and sole traders with an unpaid income tax bill
• Small businesses behind on BAS, GST or PAYG withholding payments
• Companies and trusts with overdue tax or activity statement debts
• Anyone who has received a debt letter from the ATO, or who has defaulted on a payment plan
• Anyone currently paying the ATO by credit card, which ends after 30 November 2026

Five golden rules

Tax debt is stressful, and it rarely goes away on its own. The sooner you get help, the more options you have. These are the five simple golden rules we stand by.

Speak to one of our experienced accountants to reduce your financial burden and get back to the standard of living you deserve.

Why acting early matters: the general interest charge

The ATO can apply the general interest charge (GIC) to any tax or other amount that is still unpaid after its due date. That includes a shortfall that comes from an amended or corrected return, an underestimated instalment and a return lodged late.

GIC compounds daily, so a debt that is left alone grows a little every day. The rate is reset each quarter, and the ATO generally announces the next quarter's rate about two weeks before it starts.

At 4 October 2026 the ATO has not published the rate for January to March 2027. Check the ATO general interest charge rates page for the latest quarter.

GIC keeps accruing while you pay off a debt under a payment plan, so the shorter the plan, the less interest you pay.

ATO interest is no longer tax deductible

Under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025, which is now law, GIC and shortfall interest charge (SIC) incurred on or after 1 July 2025 cannot be claimed as an income tax deduction in 2025–26 or later returns. This applies even when the underlying debt relates to an earlier year.

GIC or SIC incurred before 1 July 2025 can still be claimed in the 2024–25 and earlier income years. Because the interest is now an after-tax cost, carrying a tax debt is more expensive than it used to be, which makes a fast repayment plan even more valuable.

The rules on remission have not changed: you can still ask the ATO to remit interest charges, and each request is assessed on its circumstances.

ATO payment plans

If you cannot pay in full by the due date, the ATO may let you pay by instalments. A payment plan spreads the debt over the shortest fixed period you can manage, with weekly, fortnightly or monthly payments, usually after an upfront amount. The ATO decides eligibility and may not accept the terms proposed.

Our guide to ATO payment plans explains the process step by step.

Setting one up

If you owe $200,000 or less (as stated by the ATO at October 2026), you may be able to set up a plan yourself through ATO online services (individuals and sole traders, via myGov), Online services for business, or the ATO self-help phone line. A registered tax agent such as Ross Accounting can also set one up for you through Online services for agents.

When a phone call to the ATO is needed

• You owe $200,000 or more
• You need longer than 2 years to repay
• You need to renegotiate an existing plan, or a self-service plan was not accepted
• You are in significant financial hardship, insolvent, bankrupt or in dispute
• Possibly also where there has been a warning of firmer recovery or legal action in the past 6 months, or 2 or more plans defaulted on or cancelled in the past 12 months

Keeping the plan on track

• Income tax and activity statement debts need separate payment plans.
• New tax bills must still be lodged and paid on time, or the plan can default and the whole overdue balance becomes payable at once.
• Any refunds or credits are applied to the debt, but they do not replace the scheduled instalment.
• You can make extra payments or pay the balance off early at any time.

Interest-free plans for small business activity statement debts

Small businesses with overdue activity statement (BAS) amounts may qualify for an interest-free payment plan over 12 months. GIC is still charged, but it is automatically remitted as long as the plan is maintained. According to the ATO (page updated September 2026), the business generally needs to:

• have annual turnover under $2 million
• owe recent activity statement amounts of $50,000 or less that have been overdue for up to 12 months
• have a good payment and lodgement history, with no more than one plan default in the last 12 months and no outstanding activity statements
• be unable to get finance through normal business channels, and show it remains viable

Payments are made by direct debit, and all other lodgement and payment obligations must be met during the plan. Keeping your BAS and GST up to date is the first step.

Credit card payments end after 30 November 2026

The ATO has announced that it will stop accepting credit cards as a payment method after 30 November 2026. Other payment methods remain available.

A payment plan with a direct debit linked to a credit card needs a different payment method before the next instalment due after 30 November 2026. According to the ATO, credit card payments after that date will be unsuccessful and the plan may move into arrears or default. The ATO is writing to taxpayers with affected plans, and we can help update the payment method.

Other options when a plan is not enough

Payment plans suit most situations, but the ATO has other tools for harder cases. Strict criteria apply to each.

• Secured payment plans: where an agreement cannot otherwise be reached, the ATO may accept security, preferably a registered mortgage over freehold property or an unconditional guarantee from an Australian bank.
• Remission of interest charges: you can ask the ATO to remit GIC, and it assesses each request carefully against the circumstances.
• Compromise of a tax debt: an agreement for the ATO to accept a lesser amount on an undisputed debt. It is considered only after other options, generally cannot be less than your total net assets, and may require giving up rights such as carried-forward losses.

Whatever the size of the debt, lodging on time matters: unlodged returns and activity statements limit the options available and can lead to penalties.

How it works

1. 1
   Tally the debt

   We check your ATO accounts with you, so you know exactly what is owed on each account, including interest and penalties.

2. 2
   Catch up on lodgements

   We prepare and lodge any overdue tax returns and activity statements, so the debt figure is accurate and your options stay open.

3. 3
   Build a budget

   We look at your income, expenses and cash flow to work out a repayment amount you can realistically keep up.

4. 4
   Deal with the ATO

   As your registered tax agent, we can set up or renegotiate a payment plan and, where it fits, request remission of interest.

5. 5
   Stay on track

   We help you set aside GST, PAYG and tax as you go, so new bills are paid on time and the plan does not default.

What to bring

• Recent ATO letters, notices and statements of account
• Your tax file number and, for a business, your ABN
• Bank statements, including balances and any lines of credit
• Details of income, regular expenses, assets and other debts
• Any existing ATO payment plan details