ATO debts are scarily easy to rack up. I posted a couple of weeks ago about ATO debts but if the debt is more than $25,000 – there’s a different process.
The best course of action is to contact the ATO. You’ll be asked questions about your (or your business) financial position and capacity to repay the debt. You’ll also be asked if you’ve attempted to seek external finance in order to repay the ATO. As with smaller debts, ideally the ATO want repayment within 12 months and generally seek a large upfront payment on the account. The lenience of the arrangement you are able to make with them generally depends on your past history of lodgements and payments.
The most common outcome for ATO debts is that you agree with the ATO to repay the debt by repayment plan. This is often monthly repayments done over a period of time. There’s a few important things to know about repayment plans though:
- You must lodge and pay all of your other obligations on time and in full and
- General interest will be charged on your account (currently 10.66%) and
- If you are due a refund from the ATO this will be automatically offset against your debt and
- If you don’t meet all of these conditions, your payment arrangement will be considered in “default” and further action (sometimes legal) will be taken immediately. It’s really difficult to get back into a payment arrangement once you’ve defaulted and often in such circumstances the only acceptable payment form is full payment.
Moral of the story – if you get a debt and can’t pay it, communicate with the ATO. Or call us on 07 5576 0011 and we’ll talk to the ATO on your behalf. We have a pretty good track record of being able to get a suitable arrangement for both our client and the ATO.