Payment Plans and Hardship in Victoria
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 Victoria differs from federal law
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.
Additional Steps in Victoria
Contact the SRO on 13 21 61 to discuss payment options for Victorian 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 1997 (Vic), ss 20-28; Windfall Gains Tax Act 2021 (Vic), Part 4; Taxation Administration Act 1953 (Cth)
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.
Payment Plans and Hardship in other states
Same topic, different jurisdiction. Pick the one that applies to you.