Payment Plans and Hardship in New South Wales
Reviewed by the Commoner Law Editorial Team. 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
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.
How New South Wales differs from federal law
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.
Additional Steps in New South Wales
Contact Revenue NSW on 1300 368 710 to discuss payment options for state taxes. For ATO debts, set up a payment plan through myGov or call the ATO on 13 11 42. Free financial counselling is available through the National Debt Helpline (1800 007 007).
Relevant Law: Taxation Administration Act 1996 (NSW), ss 25-31; Taxation Administration Act 1953 (Cth); Land Tax Act 1956 (NSW)
Common Questions
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 H...
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.
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