ATO payment plan: How to set one up for your business

Published Thursday 23 July 2026

Table of contents

• What is an ATO payment plan?
• Are you eligible for an ATO payment plan?
• What is an alternative payment plan?
• How do you set up an ATO payment plan?
• How much should you offer to pay?
• What happens after you set it up?
• Simplify ATO payment plans with Xero
• FAQs on ATO payment plans

Key takeaways

• An ATO payment plan lets you repay eligible tax debts over time while staying compliant with lodgements.
• Set instalments to match your cash flow so your ATO tax debt payment plan stays on track without strain.
• Choose a payment frequency that fits your cash cycle and adjust early if your situation changes.
• Stay in contact with the ATO so you can vary an arrangement early and avoid default.

What is an ATO payment plan?

An ATO payment plan, also called an ATO payment arrangement or ATO business payment arrangement, lets you spread out tax debt repayments over time. It's designed for small businesses that can't pay their full tax bill by the due date but can commit to regular instalments.

A payment plan lets you pay your debt over time in smaller, more manageable amounts, with agreed-upon instalments made weekly, fortnightly, or monthly until the balance is cleared. The arrangement keeps you compliant with the Australian Taxation Office (ATO) while you manage cash flow pressures.

What taxes can an ATO payment plan cover?

You can use an ATO payment plan for your small business to cover a range of tax types. The ATO will consider a payment plan for most tax debts, but you must be up to date with lodgements and continue to lodge on time while the arrangement is active.

The following tax types are eligible:

• Income tax
• Goods and services tax (GST) on business activity statements (BAS)
• Pay as you go (PAYG) withholding and instalments
• Fringe benefits tax (FBT)
• Superannuation guarantee charge (SGC)

What costs and conditions apply?

Even if you're on a payment plan, the general interest charge (GIC) will continue to be added to your debt and compounds daily. The sooner you clear the debt, the less interest you'll pay.

From 1 July 2025, you won't be able to claim GIC as a tax deduction.

To keep your arrangement active, you must meet the following conditions:

• Lodge all outstanding returns before applying.
• Lodge new returns on time while the plan is in place.
• Pay each instalment in full and on the due date.
• Pay new tax debts as they fall due.

If you miss a payment or fall behind on lodgements, the ATO may cancel the arrangement and take firmer recovery action, including garnishee notices or legal proceedings.

Are you eligible for an ATO payment plan?

You may get an ATO payment plan depending on your lodgement status, the size of your debt, and your compliance history. The ATO assesses each application individually, but most businesses and individuals can access a plan if they meet the basic requirements.

To be eligible, you'll generally need to have lodged all outstanding tax returns and activity statements before applying, owe a tax debt you can't pay in full by the due date, be able to commit to a regular instalment schedule, and continue lodging and paying new obligations on time while the plan is active.

The ATO is more likely to approve your application quickly if your debt is under $200,000 and your lodgements are up to date. For larger debts or more complex situations, the ATO may ask for supporting information such as a cash flow statement or profit and loss report before deciding.

What is an alternative payment plan?

In some cases, you might be eligible for an alternative payment plan. This is a specific arrangement for businesses with certain overdue activity statement amounts. Unlike a standard payment plan, it may be interest-free for a period if you meet the criteria.

To qualify, your business generally needs to have a smaller tax debt and meet turnover thresholds set by the ATO. This option is designed to help businesses with good compliance histories get back on track without the extra cost of interest charges.

It's worth checking the ATO's payment plan guidance to see whether your business qualifies before applying for a standard arrangement.

How it works

You set up an alternative payment plan by contacting the ATO directly rather than through online services. The ATO will assess your business's financial position and work with you to agree on a realistic instalment schedule based on your cash flow, an upfront payment to demonstrate commitment, and ongoing lodgement and payment conditions you must meet to keep the arrangement active.

The GIC still applies to the outstanding balance during the arrangement.

If you already have a payment plan

If you're already on a standard payment plan and your circumstances change, you may be able to transition to an alternative arrangement. Contact the ATO before you miss a payment to discuss your options. Acting early gives you more flexibility and reduces the risk of the ATO cancelling your existing plan.

How do you set up an ATO payment plan?

Setting up an ATO payment plan is straightforward if you're prepared. You can apply online through myGov or the ATO's online services for business, or you can call the ATO directly to negotiate terms.

What to prepare before you apply

Before you apply, gather the details you'll need to propose a realistic ATO payment arrangement. Having this information ready speeds up the application and shows the ATO you're serious about managing the debt.

Make sure you have the following ready before you start:

• Confirm your total ATO balance and due dates.
• Gather your Australian business number (ABN) and bank details for direct debit.
• Decide on a weekly, fortnightly, or monthly amount you can sustain.
• Catch up on overdue lodgements that may block approval.

How to use the ATO's payment plan estimator

The ATO's online payment plan estimator lets you calculate a proposed instalment amount before you formally apply. It's a practical first step that helps you enter the application with a realistic figure already worked out, so you're not guessing when you submit your proposal.

To use the estimator, follow these steps:

1. Go to the payment plan estimator on the ATO website
2. Enter your total debt amount and preferred start date
3. Adjust the instalment frequency (weekly, fortnightly, or monthly) to see how each option affects your repayment schedule
4. Use the output as the basis for your instalment proposal when you apply online

The estimator doesn't submit an application or lock you into a plan. It simply gives you a clear picture of what different payment options look like before you commit.

How to request a plan by phone

If you'd rather speak to someone, call the ATO's lodge and pay the enquiry line on 13 11 42, or 13 28 61 for individual enquiries. Be ready to explain your current cash flow position and why you can't pay in full, an upfront amount you can pay immediately (if possible), and a sustainable schedule with direct debit preferences.

The ATO may ask for supporting documents, such as a cash flow statement or profit and loss report, especially for larger debts. They'll work with you to find a payment plan that fits your circumstances.

For debts of $200,000 or less, you may be able to set up a payment plan yourself through online services. The ATO will review your proposal and either approve it automatically or contact you to discuss adjustments.

When to call the ATO instead

For larger debts or longer repayment periods, you'll need to contact the ATO directly, such as if you owe $200,000 or more or require a repayment timeframe beyond 2 years.

You'll also need to call if:

• Your debt is above the threshold for online self-service.
• You have a disputed tax assessment.
• You've previously defaulted on a payment plan.
• Your account has a hold or restriction that prevents online access.
• You want to negotiate terms beyond what the online tool allows, such as a longer repayment period or reduced instalment during a hardship period.

When you call, have your tax file number (TFN) or Australian business number (ABN), your total debt amount, and a proposed instalment schedule ready. The ATO may ask for supporting documents for larger or more complex arrangements.

Follow these steps to apply online

Here's the end-to-end sequence so you can follow it without guesswork:

1. Confirm your total tax debt and any immediate amounts due. Check your ATO account balance via myGov or online services for business to get an accurate figure before you start.
2. Calculate an affordable instalment using your cash flow. Map your expected inflows and outflows over the next few weeks to find a realistic weekly or monthly surplus you can commit to.
3. Log in to myGov or online services for business. Make sure your account is linked to the ATO and that your contact details are current before you proceed.
4. Select the relevant account and choose set up a payment plan. You'll be prompted to enter your proposed instalment amount and frequency at this step.
5. Enter your proposed amount and frequency, add payment details, and submit. Double-check your bank account details before confirming, as errors here can delay the first payment.
6. Note your plan reference and first instalment date, then set reminders. Once approved, the ATO will send confirmation with your payment schedule – save this for your records.

How much should you offer to pay?

Setting your instalments at the right level is critical. Offer too little and the ATO may decline your proposal. Offer too much and you'll strain your cash flow, risking missed payments and a cancelled plan.

How to calculate an affordable amount

Use these steps to find an amount that fits your real cash flow:

1. Map the next 13 weeks of inflows and outflows to find a weekly surplus. Include all regular expenses – payroll, rent, supplier payments – so your surplus figure reflects what's genuinely available after obligations are met.
2. Keep a cash buffer for seasonality and unexpected costs. A buffer of at least 2 to 4 weeks of operating expenses gives you room to absorb a slow period without missing an instalment.
3. Offer less than the surplus so you stay cash positive after each instalment. For example, if your weekly surplus averages $1,000, consider offering $600 to $800 per week. This leaves room for fluctuations and ensures you can meet the commitment.

Deciding whether to pay weekly, fortnightly, or monthly

Match your payment frequency to how cash enters and leaves your business. Aligning your instalments with your cash cycle reduces the risk of missed payments and keeps the arrangement sustainable.

Here's a simple guide to choosing the right frequency:

• Choose weekly if inflows are small and frequent (for example, retail or hospitality)
• Choose fortnightly to align with payroll timing
• Choose monthly if invoices and collections batch monthly (for example, professional services)

What happens after you set it up?

Once your ATO business payment arrangement is approved, your focus shifts to compliance and communication. Staying on top of lodgements and payments keeps the arrangement active and protects your business from escalated recovery action.

Staying compliant during your plan

Follow these simple habits to keep the arrangement in good standing. If your circumstances change – such as a seasonal downturn or unexpected expense – contact the ATO early to discuss adjusting the plan. Proactive communication is far better than missing a payment.

The key habits to maintain are:

• Lodge BAS and tax returns on time
• Pay each instalment in full and on the due date
• Keep bank and contact details current
• Continue to pay new tax debts as they fall due

Here’s more information about BAS and how to lodge it.

Modifying your instalment amount or due date

You can change your instalment amount or due date through ATO online services without needing to call. This is useful if your cash flow changes and you need to adjust your commitment before a payment falls due – acting online is faster and creates a clear record of the change.

To modify your plan, follow these steps:

1. Log in to myGov and select the ATO, or open ATO online services for business.
2. Go to Accounts and payments, then select Payment plans.
3. Select the active plan you want to change.
4. Choose Modify instalment and enter the new amount or due date.
5. Confirm the change and save your updated payment schedule.

If the modification you need isn't available online, call the ATO on 13 11 42 to negotiate the change directly. Contact the ATO before the instalment is due, not after, to avoid a missed payment being recorded against your plan.

Updating your payment details

If your bank account or card details change while you're on a payment plan, update them in ATO online services before your next instalment is due to avoid a failed payment. A failed payment can put your arrangement at risk, so it's worth updating your details as soon as you know they've changed.

To update your payment details, follow these steps:

1. Log in to myGov and select the ATO, or open ATO online services for business.
2. Go to Accounts and payments, then select Payment plans.
3. Select your active plan and choose Update payment method.
4. Enter your new bank account or card details and confirm.

Keep your contact details current in the same section so the ATO can reach you if there's an issue with a payment.

Missing a payment

If you miss an instalment, act quickly to keep control and avoid a cancelled plan. The ATO is generally willing to work with you if you're transparent and proactive. Missing one payment doesn't automatically cancel the plan, but repeated defaults will trigger firmer action.

If you do miss a payment, here's what to do:

• Pay as soon as possible or call the ATO on 13 11 42 to discuss options.
• Ask to adjust the amount or frequency to fit your current cash flow.
• Keep lodging on time while you sort the missed instalment.

Changing or canceling your plan

You can vary, pause, or cancel the arrangement if your cash flow changes. To request a change, log in to myGov or online services for business and select manage my payment plan, or call the ATO to negotiate new terms.

If your financial position improves, consider paying off the debt early to reduce the GIC and free up cash for other business priorities.

Simplify ATO payment plans with Xero

One of the trickiest parts of managing an ATO payment plan is knowing whether your cash flow can actually support each instalment, especially when income is uneven or expenses spike unexpectedly. Xero gives you clear cash flow forecasts, organised bills, and fast bank reconciliation so you can size safe repayments and stay on top of every due date without the guesswork.

Keep your ATO payment arrangement on track with automation and insights that help you adjust your plan early if your situation changes.

Get one month free.

FAQs on ATO payment plans

Here are answers to common questions about ATO payment plans, from eligibility and approval to managing interest and combining debts.

What is the maximum term for an ATO payment plan?

The ATO doesn't publish a fixed maximum term, but most plans run for 12 to 24 months. Larger debts may be approved for longer terms, especially if you can demonstrate a realistic repayment schedule and strong compliance history.

What interest applies to ATO payment plans?

The ATO applies a general interest charge (GIC) to any unpaid balance while the plan is active. In some cases, you can ask the ATO to remit part of this interest if you have exceptional circumstances. Check current GIC rates on the ATO website.

Can you combine multiple tax debts in one plan?

Not always. Income tax and activity statement accounts require separate payment plans to be set up. If you have multiple accounts with overdue debts, you'll need to pay them in full or set up separate payment plans for each account.

Will an ATO payment plan affect your credit rating?

An ATO payment plan is an arrangement with the ATO and doesn't appear on your credit file. However, if the ATO takes legal action to recover the debt – such as issuing a garnishee notice or lodging a court judgment – that may affect your credit rating.