For many financially troubled businesses, the ATO is one of the first creditors that misses out on the payment cycle.

Surprisingly to many, the ATO is quite reasonable in its dealings with taxpayers who are struggling to pay their tax debts.  In fact, the ATO is very generous in the Payment Arrangements it will agree.

  • The ATO has quite specific guidelines for its staff that create policies and procedures in dealing with companies that are late in paying tax debts.
  • But those policies change over time and different officers may apply their discretions differently. If a company can’t pay a tax debt on time it should certainly telephone the ATO and discuss what payment arrangements are possible.

At the least, it is common to be able to obtain Payment Arrangements of at least two or three months, with no interest being applicable.

But be careful.

  • The ATO is usually quite accommodating the first time you enter a Payment Arrangement.  But the ATO is much less generous if you default.
  • Also, it will be a standard term of the agreement that if a payment is made late then all future payments become immediately due and payable.

It is likely that if you default on a payment arrangement, the matter will be referred to the enforcement division and your company will be put into the process of enforcement.  That is, the ATO will simply apply its processes and procedures in pursuit of the outstanding debt and there will be little if any further negotiation.