ATO Payment Plan: Setting One Up for a Client

Set up an ATO payment plan for your client through Online services for agents. Use the registered agent phone line when the debt or proposed instalments fall outside the online rules. Agree a payment amount the client can maintain while paying new tax obligations.

Setting Up an ATO Payment Plan as the Agent

You can arrange a client’s plan once your authority covers debt management and you have access to the relevant account. A BAS agent must stay within their registration and authority.

The ATO’s general guidance allows online plans for individuals and businesses owing $200,000 or less. Its agent user guide specifies a balance under $200,000. The debt must be outside an existing plan, with at most two account defaults in two years. At the exact boundary, use the phone route if the service does not accept the plan.

Follow the ATO’s published agent payment-plan instructions:

1. Select the client, then Accounts and payments, Payment plans and Add.
2. Choose the account and the full or overdue balance. Any excluded amount still needs payment when due.
3. Choose the payment method and frequency. Enter the first payment, upfront amount and instalments.
4. Calculate the plan and review its schedule. Correct any error before submitting the declaration.
5. Save the confirmation and payment schedule. Send the client the agreed terms and check the plan appears against the correct account.

If online creation fails, take the proposed schedule and cash-flow evidence to the registered agent phone route. The Online services for agents guide covers the wider portal.

Direct debit authorises the ATO to deduct scheduled payments from the nominated account or card. A standing transfer is a payment instruction the client gives their bank. Confirm the account holder’s authority, available funds and the payment source recorded in the confirmation. Only the card holder can authorise a card direct debit.

What the Agent Checks Before Proposing a Plan

Confirm the client’s lodgments and full debt position before proposing instalments. Check every ATO account and any debt on hold. Identify an existing plan or recovery letter. Use the full-balance checks without assuming one account shows everything owed.

Unlodged returns can conceal further liabilities. Identify what is overdue and agree how to catch up late tax returns. Contact the ATO about urgent debt action while that work proceeds.

Size the instalment from cash actually available after wages, operating costs and other commitments. Allow separately for the next BAS, income tax and super obligations. A quarterly client’s spare cash after a strong trading month can overstate what they can pay every month.

For an invented example, a business has $2,800 available monthly after operating commitments. It needs $1,300 of that for upcoming tax obligations. The remaining $1,500 is the starting point for testing a debt instalment, before allowing for uneven receipts and unexpected costs.

Do not propose a payment that depends on income the client cannot support. The TPB Code requires lawful action in your client’s best interests and reasonable care when establishing their affairs and applying tax law. Keep the budget and client approval with your file.

Write to the client before submission. Explain estimated interest, the instalment schedule, continuing lodgment and payment obligations, your fee and what a missed payment can trigger.

Interest and Costs of an ATO Payment Plan

General interest charge (GIC) normally continues on the unpaid balance during a payment plan. It compounds daily and the rate changes quarterly. Use the ATO’s GIC rates for the relevant period instead of treating a plan as fixed-rate finance.

The payment plan estimator models repayment time and estimated interest. It excludes super guarantee charge debts. Use its result to compare affordable schedules, then retain the schedule the ATO actually accepts.

For standard income years, the non-deductibility rules apply to GIC incurred from the start of the 2025-26 income year onward. Earlier interest has separate treatment, and substituted accounting periods need the exact ATO commencement conditions. The amending legislation denies the deduction under those conditions, even when the underlying debt relates to an earlier period.

Compare an ATO plan with borrowing using total cash cost, fees and the client’s actual tax treatment of loan interest. Borrowing is not automatically deductible or affordable merely because it pays an ATO debt.

Ask for GIC remission when the facts explain why payment was delayed and justify relief. The ATO considers circumstances outside the client’s control, reasonable steps to limit the delay and fairness to other taxpayers. A disaster or sudden serious illness can support a request. General poor trading alone usually does not.

Under the ATO’s GIC remission guidance, explain the affected period and provide evidence of the cause and mitigation. Ask for the amount justified by those facts. A payment plan is not debt forgiveness and does not guarantee remission.

Eligible small businesses can seek the ATO’s specific interest-free arrangement for overdue activity statement amounts. Its eligibility rules include turnover, debt age and payment-history conditions. Do not assume every BAS plan qualifies.

Larger Debts and Plans the ATO Refuses

Take a larger debt or a proposal the online service rejects to the ATO for discussion. Prepare the client’s financial position, including assets, liabilities, available cash and a forecast showing how the proposed payments work. Old debts and previous failed arrangements need an explanation of what has changed.

Outstanding lodgments, repeated defaults and instalments that leave the debt growing are reasons a proposal can fail. An online rejection can also reflect the service’s limits. It does not establish that every negotiated proposal will be refused.

If the ATO refuses the proposal, identify the reason before changing it. A supported upfront payment can reduce the remaining debt. A higher instalment can shorten the term if the budget supports it. Present the revised figures and obtain acceptance before telling the client the plan is in place.

If the business cannot meet its debts as they fall due, refer the client for qualified solvency advice. Repeatedly extending tax debt cannot resolve that problem. A company’s payment plan does not by itself protect its directors from director penalty exposure.

Keeping the Plan on Track

Monitor both instalments and new liabilities throughout the plan. Put payment dates and upcoming lodgments into your practice’s workflow, with an owner for reviewing the account after each new assessment or BAS.

A missed instalment or unpaid new debt can put the plan into default and expose the client to recovery action. Contact the ATO promptly with the reason and a revised affordable proposal. Do not assume paying late automatically restores the arrangement.

Consider an invented quarterly BAS client with $9,000 left on a plan. A new BAS adds $3,000, making $12,000 before further interest. First establish whether the client can pay the new BAS by its due date. If they cannot, ask the ATO to revise the arrangement to cover that liability. Confirm the new balance and schedule before replacing the old workflow reminders.

ATO credits and refunds reduce the tax debt through offsetting. They do not replace the scheduled instalment. Reconcile the credit, continue the agreed payments and confirm any revised end point with the ATO.

You can adjust an eligible bank-direct-debit plan through agent services. Only the card holder can modify a card-direct-debit plan or its instalments. Allow at least three business days for bank-payment changes and one business day for card-payment changes. Plans exceeding the online 24-month modification limit need ATO contact.

The client can cancel a direct debit through ATO services or by contacting the ATO. For a bank account, the client can also notify their bank and must tell the ATO to stop further attempts. Follow the direct-debit service agreement and obtain confirmation.

Cancelling the payment method leaves the debt owing. A failed deduction also leaves the instalment unpaid. Check whether a debit is still pending before arranging another payment, then agree how the missed instalment and later payments will be handled.

Collecting Debt Details at Onboarding

Ask each new client whether they owe the ATO, have a payment plan or have received debt letters. Make those questions part of the form, so an existing arrangement reaches the staff member responsible for the first job.

Collect the ATO letters, current plan terms and a rough monthly budget. Confirm the direct debit’s payment source and authority through a secure method. Collect only the bank details needed for the authorised task and avoid asking the client to email card credentials.

Tax Genie collects client answers and uploaded documents in one guided request. It chases missing information and generates your engagement letter from the collected details. Use that letter to agree the debt-management scope, fee and authority before you negotiate the client’s plan.

Record who will monitor instalments, who contacts the ATO after a problem and what the client must tell you about changed cash flow. The handover is complete when the responsible staff member has the accepted schedule and the client knows their next payment.