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Invariably most small or even large businesses need to obtain a payment plan for a tax debt, BAS, or other debt from the ATO at some stage. It can be a daunting process to obtain a payment plan given you are most likely stretched financially – hence your decision to request a payment plan. We look at:
The Automated Approach
Any tax debt under $25000 you can contact the ATO and be directed to an automated service to request, extend or manage payment terms. The number to contact the ATO is: 13 72 26
How to approach the ATO
The best way to approach the ATO is by being on the front foot – by this we mean don’t allow any agreements to lapse and then you call. Alaways call ahead of time, and if you have Tax debt payment pending and you cannot meet the agreed payment contact them as soon as you can, before the date of payment is required
How to prepare your discussion with the ATO
The ATO will generally allow 14 days after the required payment date (on request) without the need to alter or cancel your agreement. Keeping this in mind how do you prepare for your discussion with the ATO? Know your limit of what you can pay. Know when you can pay Have a budget completed and know your expenses and expected income. Plan to request your lowest monthly payment amount – base this on the months that you have the lowest cash flow and/or highest expenses. This way you can be sure you can keep your monthly arrangement without too much strain.
Your Request Limitations?
What limitations do have tyhat i need to be aware of? If your debt is under $25000 you can call via an automated service and arrange payment. The ATO likes to have a mitigating circumstance such as personal issue, illness or other to secure a long term arrangement. The ATO likes to have the debt either paid off in a 12 month term or a 24 month term and generally no longer. There is a smart phone app that can assist you to calculate payments – type in ATO into your app store to check details. If your tax debt is superannuation the ATO with want a much shorter time frame as there can be issues with the employees investment increases etc. I know i’ve indicated previously in this blog – but make your request well before the due date.
How much should i request?
Your payment should be based on factual information, if you are about to call the ATO and you have not worked out your budget, expenses and surplus then don’t call. If you are on a deadline to call that same day then call them and request an extension to finalise your budget assessment. Request payments over a 2 years term. If you can make higher payments structure a 2 years term then make additional payments, this will put you advance with your payments and allow a buffer if you have a tough month.
Feel free to contact Loan Saver Network to discuss payment plans, negotiation of Tax debt, and paying out your tax debt with a tax debt loan. You can call us on 1300 796 850.