Why can't I just have the ATO organise my tax repayments?
By PayMyTax · · 6 min read
The short answer
You can. The ATO offers payment plans for many businesses. But an ATO plan charges the general interest charge (GIC), which compounds daily and is no longer tax-deductible from 1 July 2025. The ATO can also require your lodgments to be up to date, may report larger overdue business debts to credit agencies, and can cancel the plan if you miss a payment. Financing the bill instead clears the ATO debt and gives you fixed, generally deductible repayments.
How ATO payment plans work
If you can't pay a tax debt in full by the due date, you can ask the ATO for a payment plan to pay it off in instalments. Smaller debts can often be set up online, while larger debts usually need more information about your business and your capacity to pay.
The downsides people don't expect
- GIC keeps accruing on the unpaid balance for the life of the plan, and it compounds daily.
- GIC is no longer tax-deductible, so the after-tax cost is higher than many business owners assume.
- All lodgments generally need to be up to date before a plan is approved.
- Missing an instalment can see the plan cancelled and the full debt fall due again.
- Overdue business tax debts above certain thresholds can be reported to credit reporting agencies, which can affect future borrowing.
- An outstanding tax debt can hold up refunds, as the ATO may offset them against what you owe.
The alternative: pay the ATO in full, repay over time
With PayMyTax, you choose how much to pay now via BPAY directly to the ATO and how much to defer. The deferred amount is funded by a loan provider, which pays the ATO directly at settlement. Your ATO account is cleared, and you repay the loan in weekly, fortnightly or monthly instalments. Pay later is available for amounts of $5,000 or more.
The key difference: with an ATO plan you still owe the ATO. With financing, the ATO is paid and you owe a lender on fixed terms, with interest that is generally tax-deductible.
Which option suits you?
An ATO payment plan can make sense for a small, short-term shortfall you expect to clear quickly. If the amount is larger, you want certainty on repayments, or you want to keep your ATO record clean, financing is worth comparing. Your accountant can help you weigh it up, and our ATO payment plans guide goes into more detail. You can also read why tax loan interest is generally deductible, or try the payment calculator to compare repayments.
Common questions
- Does the ATO charge interest on payment plans?
- Yes. The general interest charge (GIC) applies to the unpaid balance and compounds daily until the debt is paid.
- Is ATO payment plan interest tax-deductible?
- Not any more. From 1 July 2025, GIC is no longer tax-deductible.
- Can I still use an ATO payment plan if I prefer?
- Yes. It is a legitimate option. PayMyTax is an alternative for businesses that want to clear the ATO debt and repay on fixed terms.
Pay your tax now, repay over time
Upload your BAS or IAS statement and choose how much to pay now and how much to defer.
General information only. This article does not take your personal circumstances into account and is not tax, financial or legal advice. Speak with your accountant or tax adviser before acting. PayMyTax is operated by Tax Hitech Pty Ltd ABN 38 642 032 666 and is not a lender. See also our ATO payment plans guide.