ATO Payment Plans & Hardship (2026)
About this article
Sourced from Commonwealth Acts of Parliament, federal regulations, and official government guidance. State-level information reflects each state's own Acts and court decisions. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
Compare by state
Statute citations are verified per state. Select a state to jump to its full section below.
| Primary statute | |
|---|---|
| New South Wales | Taxation Administration Act 1996 (NSW) |
| Queensland | Taxation Administration Act 1953 (Cth) |
| South Australia | Taxation Administration Act 1953 (Cth) — payment plans |
| Tasmania | Taxation Administration Act 1953 (Cth) — payment arrangements |
| Victoria | Taxation Administration Act 1997 (Vic) |
| Western Australia | Taxation Administration Act 1953 (Cth) |
What is this right?
If you owe money to the ATO and cannot pay the full amount by the due date, you can request a payment plan. The ATO has administrative powers under the Taxation Administration Act 1953 to grant payment arrangements to help taxpayers manage their debt.
You can set up a payment plan online through myGov if you are an individual who owes $200,000 or less. For larger debts or business debts, you need to phone the ATO on 13 28 61. The ATO will consider your financial situation, income, expenses, and assets when agreeing to a plan.
Interest (the General Interest Charge or GIC) continues to accrue on your outstanding balance while you are on a payment plan. The GIC rate is set quarterly and is based on the 90-day bank bill rate plus 7%.
If paying your tax debt would cause you serious hardship — meaning you could not provide food, shelter, clothing, medical care, or education for yourself or your dependants — the Commissioner can release you from the debt in whole or in part under Section 340-5 of Schedule 1. This is a last resort and requires detailed financial evidence.
When does it apply?
This applies to any taxpayer who cannot pay a tax debt on time.
- It covers income tax, GST, PAYG, superannuation guarantee charge, and other ATO debts.
- Serious hardship release is available to individuals only, not companies.
- You should contact the ATO before the due date if you know you cannot pay.
What to Do If You Cannot Pay Your ATO Tax Debt in Australia
- Contact the ATO early — before the debt is overdue if possible.
- Set up a plan online through myGov for debts under $200,000.
- Propose a realistic payment amount you can maintain — the ATO will check that your plan will pay off the debt in a reasonable time.
- Continue to lodge returns on time while on a payment plan — failure to lodge can cancel your arrangement.
- If in serious hardship, gather evidence of your financial situation — bank statements, Centrelink records, medical bills, and a statement of your income and expenses.
- Consider contacting a free financial counsellor through the National Debt Helpline on 1800 007 007.
What should you NOT do?
- Don't ignore ATO debt notices — the ATO can garnishee your wages, bank accounts, or issue a Director Penalty Notice.
- Don't miss payment plan instalments without calling the ATO first — missed payments can cancel the arrangement.
- Don't assume the debt will go away — unlike some other debts, tax debts generally cannot be discharged easily.
- Don't pay for a debt negotiation service — you can deal with the ATO directly or use a free financial counsellor.
About Tax Rights in Australia
The tax year runs 1 July to 30 June and most individuals lodge by 31 October. Income tax is set by the Income Tax Assessment Acts 1997 and 1936; GST (10%) sits under the A New Tax System (GST) Act 1999. If you disagree with an ATO assessment, you have 60 days to lodge an objection under Part IVC of the Taxation Administration Act 1953. Appeals go to the Administrative Review Tribunal (replaced AAT October 2024) or the Federal Court. The Inspector-General of Taxation handles complaints about ATO conduct.
Worked Examples
ScenarioYou owe the ATO $6,000 at the due date but can only pay it over several months.
OutcomeYou can request an ATO payment plan to pay the debt in instalments — many plans can be set up online or by phone. The general interest charge generally accrues on the outstanding balance while you pay it down, so paying faster reduces the total. Engaging early helps avoid firmer recovery action.
Based on ATO administrative practice under the Taxation Administration Act 1953 (payment plans + general interest charge on unpaid debt). GIC rates change quarterly — check the ATO. The $ figure is illustrative. Educational information, not tax or legal advice.
Common Questions
Can I pay my ATO tax debt in instalments?
Yes. If you can't pay in full by the due date you can request a payment plan to pay by instalments. Smaller debts can often be arranged online through myGov or the ATO's automated phone service; larger debts may require discussing your situation with the ATO.
Does interest apply to an ATO payment plan?
Usually yes — the general interest charge (GIC) generally accrues on the unpaid balance while the plan runs, so the longer you take, the more it costs. The GIC rate is set by the ATO and changes quarterly. Paying off faster reduces the interest.
What if I genuinely can't afford my tax debt?
Contact the ATO as early as possible. Options can include a longer payment plan, and in cases of serious hardship you may be able to apply for release from certain eligible tax debts. Ignoring the debt risks firmer recovery action, so engage early.
Will the ATO take action if I don't pay?
If you don't pay or arrange a plan, the ATO can use recovery actions such as offsetting refunds, issuing garnishee notices, and in serious cases legal action. Setting up a payment plan early is the best way to avoid escalation, and support is available if you're struggling.
What is the payment plans and hardship right in Australia?
If you owe money to the ATO and cannot pay the full amount by the due date, you can request a payment plan. The ATO has administrative powers under the Taxation Administration Act 1953 to grant payment arrangements to help taxpayers manage their debt.You can set up a payment plan online through myGov if you are an individual who owes $200,000 or less. For larger debts or business debts, you need to phone the ATO on 13 28 61. The ATO will consider your financial situation, income, expenses, and assets when agreeing to a plan.Interest (the General Interest Charge or GIC) continues to accrue on...
When does payment plans and hardship apply?
This applies to any taxpayer who cannot pay a tax debt on time.It covers income tax, GST, PAYG, superannuation guarantee charge, and other ATO debts.Serious hardship release is available to individuals only, not companies.You should contact the ATO before the due date if you know you cannot pay.
What should I do if I cannot afford to pay my tax debt to the ATO in Australia?
Contact the ATO early — before the debt is overdue if possible.Set up a plan online through myGov for debts under $200,000.Propose a realistic payment amount you can maintain — the ATO will check that your plan will pay off the debt in a reasonable time.Continue to lodge returns on time while on a payment plan — failure to lodge can cancel your arrangement.If in serious hardship, gather evidence of your financial situation — bank statements, Centrelink records, medical bills, and a statement of your income and expenses.Consider contacting a free financial counsellor through the National Debt...
What mistakes should I avoid with payment plans and hardship?
Don't ignore ATO debt notices — the ATO can garnishee your wages, bank accounts, or issue a Director Penalty Notice.Don't miss payment plan instalments without calling the ATO first — missed payments can cancel the arrangement.Don't assume the debt will go away — unlike some other debts, tax debts generally cannot be discharged easily.Don't pay for a debt negotiation service — you can deal with the ATO directly or use a free financial counsellor.
State-by-state details
New South Wales
Primary statute: Taxation Administration Act 1996 (NSW)
Both the ATO and Revenue NSW offer payment plans and hardship provisions for taxpayers who cannot pay their liabilities in full.
- Revenue NSW allows payment plans for outstanding payroll tax, land tax, and stamp duty liabilities. Interest accrues on overdue amounts at the statutory rate set under the Taxation Administration Act 1996 (NSW).
- Revenue NSW may remit penalties and interest in cases of genuine hardship or where the taxpayer demonstrates a reasonable cause for late payment.
- For land tax specifically, NSW landowners facing hardship may apply to the Chief Commissioner for a deferral or reduction of land tax, particularly where the land is the taxpayer's principal place of residence and they face financial difficulty.
- The ATO's payment plan processes apply equally to NSW residents as to all Australians — plans can be set up online through myGov for debts under $200,000.
Queensland
Primary statute: Taxation Administration Act 1953 (Cth)
Payment plans for federal tax debts are arranged with the ATO. For Queensland state taxes, the Queensland Revenue Office has its own hardship and payment plan provisions.
- The QRO can grant extensions of time to pay state taxes and can enter into payment arrangements for payroll tax, land tax, and transfer duty debts.
- Under the Taxation Administration Act 2001 (Qld), the Commissioner of State Revenue has a broad discretion to remit penalty tax and interest in cases of hardship or where the taxpayer has made a voluntary disclosure.
- Queensland's First Home Owner Grant Act 2000 provides for recovery of grants incorrectly paid, but the QRO can waive recovery in cases of genuine hardship.
- For individuals experiencing financial hardship, free financial counselling is available through National Debt Helpline (1800 007 007), with Queensland-specific referrals available.
South Australia
Primary statute: Taxation Administration Act 1953 (Cth) — payment plans
Both the ATO and RevenueSA offer payment plan and hardship arrangements for taxpayers in South Australia who are unable to pay their tax debts in full.
- The ATO allows taxpayers to set up payment plans for federal tax debts through myGov, by phone, or through a tax agent. Interest (the General Interest Charge) continues to accrue on the outstanding balance.
- The ATO may remit penalties and interest in cases of genuine hardship, particularly if the taxpayer can demonstrate circumstances beyond their control (illness, natural disaster, financial hardship).
- RevenueSA offers payment arrangements for SA state tax debts including land tax, stamp duty, and payroll tax. Applications can be made in writing or by contacting RevenueSA directly.
- SA residents facing financial hardship can access free financial counselling through services such as Uniting Communities, Anglicare SA, and the Salvation Army, which can assist with negotiating payment plans with both the ATO and RevenueSA.
Tasmania
Primary statute: Taxation Administration Act 1953 (Cth) — payment arrangements
Both the ATO and the State Revenue Office of Tasmania offer payment plan and hardship arrangements for taxpayers who are unable to pay their tax debts in full.
- The ATO allows taxpayers to set up payment plans for federal tax debts through myGov, by phone, or through a tax agent. Interest (the General Interest Charge) continues to accrue on the outstanding balance.
- The ATO may remit penalties and interest in cases of genuine hardship, particularly if the taxpayer can demonstrate circumstances beyond their control.
- The State Revenue Office of Tasmania offers payment arrangements for state tax debts. Applications can be made by contacting the SRO directly.
- Tasmanian residents facing financial hardship can access free financial counselling through services such as Anglicare Tasmania, Colony 47, and the Salvation Army.
Victoria
Primary statute: Taxation Administration Act 1997 (Vic)
Both the ATO and the Victorian SRO offer payment plans and hardship provisions for taxpayers who cannot pay their liabilities in full.
- The SRO allows payment plans for outstanding payroll tax, land tax, and duties. Interest accrues at the statutory rate set under the Taxation Administration Act 1997 (Vic).
- The SRO may waive or remit penalties and interest where the taxpayer demonstrates reasonable cause for non-compliance or financial hardship.
- For land tax specifically, a Victorian landowner can apply for a deferral if they face financial hardship — for example, if the land is their principal place of residence and they are on a pension or low income.
- Victoria's Windfall Gains Tax includes provisions for deferral of up to 30 years where the tax liability arises from a rezoning but the landowner has not yet realised the gain through a sale.
- The ATO's payment plan processes apply equally to Victorian residents as to all Australians.
Western Australia
Primary statute: Taxation Administration Act 1953 (Cth)
Payment plans for federal tax debts are arranged with the ATO. For WA state taxes, RevenueWA has its own hardship and payment plan provisions.
- RevenueWA can grant extensions of time to pay state taxes and can enter into payment arrangements for payroll tax, land tax, and transfer duty debts.
- Under the Taxation Administration Act 2003 (WA), the Commissioner has discretion to remit penalty tax and interest in cases of hardship or where the taxpayer has made a voluntary disclosure.
- WA's mining-dependent economy means that businesses and individuals can experience cyclical financial hardship tied to commodity prices. RevenueWA is experienced in managing payment plans during economic downturns.
- Free financial counselling is available through the National Debt Helpline (1800 007 007) with WA-specific referrals, and the Financial Counsellors' Association of WA.
Payment Plans and Hardship in other states
Same topic, different jurisdiction. Pick the one that applies to you.