Important Update: ATO’s New Approach to Payment Plans
The Australian Taxation Office (ATO) has significantly ramped up its approach to managing overdue tax debts — particularly when it comes to payment plans. Businesses and individuals can no longer assume the ATO will take a lenient or slow-paced approach. The message is clear: proactive communication is essential.
Payment Plans Under Stricter Scrutiny
Over the past year, the ATO has sharpened its focus on debt collection, with a noticeable tightening around the approval and extension of payment plans. We’re seeing more cases where payment plan requests are being declined or where existing arrangements are being cancelled due to missed deadlines or insufficient engagement.
In short, it’s no longer enough to submit a request
and wait. The ATO is expecting more from taxpayers — timely lodgements, realistic repayment proposals, and clear evidence of financial position where relevant.
Get on the Front Foot
If you or your business are facing challenges meeting ATO obligations, the most effective step you can take is to engage early and openly. Acting before a due date passes allows more flexibility in negotiating terms. Once debt becomes overdue or lodgements fall behind, your options narrow quickly.
At Zweck, we work closely with clients to:
- Engage with the ATO early on your behalf
- Structure realistic and compliant payment plans
- Request deferrals or extensions where possible
- Monitor compliance with existing arrangements
Avoiding or delaying contact with the ATO often leads to penalties, interest, or even legal action — all of which can usually be prevented with proactive planning.
Interest No Longer Deductible from 1 July 2025
Another important change to be aware of: from 1 July 2025, interest charged by the ATO on outstanding tax debts will no longer be tax deductible. This means businesses will no longer receive a tax benefit on General Interest Charges (GIC) — further increasing the real cost of unpaid tax.
For the 2025–26 income year, the GIC rates have also been announced. For the July to September quarter, the GIC annual rate is 10.78%, which equates to a daily rate of approximately 0.0295%. This underscores how costly carrying unpaid tax debt will become under the new rules.
This upcoming change reinforces the need to stay ahead of your obligations. Carrying tax debt will soon become even more expensive, both financially and from a compliance perspective.
Final Thoughts
The ATO’s position is clear — it’s time to take your tax obligations seriously and stay ahead of the curve. If you’re unsure where you stand or need help managing payments, don’t wait until it’s too late. Reach out to the Zweck team to discuss your situation and get the right plan in place.
