Meeting your tax payment deadlines is important to avoid penalties and interest charges. However, unexpected financial difficulties can sometimes make it challenging to pay your tax debt on time. Fortunately, the Australian Taxation Office (ATO) provides options to help taxpayers in such situations, including the ability to request a deferral for tax payments. This detailed guide explains what a tax payment deferral is, when you can request one, how to apply, and important tips to manage your tax obligations effectively.
What Is a Tax Payment Deferral?
A tax payment deferral allows you to delay the due date for paying your tax debt, providing you additional time to arrange your finances. It can be a short-term solution to ease cash flow pressures caused by unforeseen circumstances such as illness, job loss, or other financial hardship.
Deferrals can apply to various tax obligations, including income tax, Goods and Services Tax (GST), Pay As You Go (PAYG) instalments, and more.
Who Can Request a Deferral?
Any taxpayer who is experiencing genuine difficulty in paying their tax debt on time may apply for a deferral. This includes individuals, sole traders, companies, and other entities.
The ATO expects that you have made reasonable efforts to pay your debt and that a deferral will help you avoid defaulting or further financial hardship.
When Should You Request a Deferral?
It is crucial to request a deferral as early as possible—preferably before the payment due date. The sooner you notify the ATO of your difficulties, the better your chances of obtaining a deferral without penalties or enforcement action.
If you miss the payment due date, you should still contact the ATO immediately to discuss options and potentially limit penalties and interest.
How to Request a Deferral for Your Tax Payment
You can request a deferral by:
1. Contacting the ATO Directly
Call the ATO on 13 28 61 and explain your financial situation. Be prepared to provide:
- Your Tax File Number (TFN) or Australian Business Number (ABN)
- Details of the tax debt
- Reason for the deferral request
- Information about your current financial position and income
The ATO officer will assess your situation and may grant a deferral or suggest an alternative payment arrangement.
2. Using Online Services
If you have a myGov account linked to the ATO, you may be able to log in and request a payment deferral or set up a payment plan online through the “Manage Payment Plans” or “Request Assistance” sections.
3. Through a Registered Tax Agent
If you work with a registered tax agent, they can negotiate with the ATO on your behalf to request a deferral or alternative arrangements.
Information You Should Provide When Requesting a Deferral
To support your request, it’s helpful to provide:
- Current income and expenses
- Assets and liabilities
- Details of any recent financial hardship, such as job loss, illness, or disaster impacts
- How long you expect to need the deferral
- Proposed plan for paying the deferred amount
Providing complete and honest information will help the ATO make an informed decision.
What Happens After You Request a Deferral?
The ATO will review your request and notify you of the outcome. If approved:
- You will receive a new payment due date or schedule.
- Interest or penalties may be waived or reduced depending on your circumstances.
- You must meet the new agreed terms to avoid enforcement action.
If your request is declined, the ATO will explain the reasons and advise on other options such as payment plans or hardship provisions.
Alternative Options If Deferral Is Not Granted
If you cannot obtain a deferral, the ATO may offer other flexible solutions:
- Payment Plans: Spread your tax debt over time in affordable instalments.
- Hardship Variations: Temporary relief from penalties or interest due to serious hardship.
- Financial Counselling: Referral to professional advisers who can help manage your overall finances.
Tips to Successfully Manage a Payment Deferral
- Communicate openly and early with the ATO about your situation.
- Keep all agreements and correspondence in writing.
- Stick to the new payment deadlines or plans once agreed.
- Seek help if your financial situation changes again.
- Keep your tax affairs up to date to avoid additional debts.
Conclusion
Requesting a deferral for a tax payment can provide much-needed breathing space if you are struggling to pay your tax debt on time. The ATO encourages taxpayers to be proactive and transparent when facing financial difficulties. By understanding the process, providing accurate information, and engaging with the ATO early, you can obtain a deferral or alternative arrangements that help you manage your tax obligations without undue stress or penalties.
Always remember that ignoring tax debts can lead to serious consequences, so it’s vital to reach out for assistance as soon as possible.
