Does the ATO still impose the general interest charge when you are in a payment plan?


Hi, it’s Catriona from Hartigan Law. I wanted to talk about what happens with the general interest charge if you’re in a payment
plan. Quite often I have people say to me that they
thought that, if they negotiated a payment plan with the Tax Office to pay their unpaid
tax debt over time, that the Tax Office would stop charging them general interest charge.
Unfortunately, this isn’t true. The Tax Office will continue to impose the
general interest charge until a tax debt is paid off in full, and that’s the standard
position that applies to the vast majority of tax debts. Occasionally there are some programs that are brought in to allow the Tax Office to
give you an interest free period. For the last couple of years there’s been one that’s applied
to small businesses who have an activity statement debt of less than $50,000. In this case, and
if that small business meets some very specific criteria, the Tax Office can allow them a
12-month interest free period. I won’t go through the criteria now, but I
will put a link below to the Tax Office website which sets out what that criteria is.
But look generally the position is that if you owe a tax debt, general interest charge
does continue to apply to that debt until you’ve paid it off in full.
Now, of course, if you have been charged the general interest charge, you can ask the Tax
Office to remit that. You need to explain what’s happened, why you haven’t paid your
tax debt, what the plan is to pay it off in full, etc.
There’s a lot of information on my website about that, so I encourage you to have a look,
and if you have any questions about the general interest charge or tax debt in general, then
give me a call and let’s have a chat about how I can help.

Leave a Reply

Your email address will not be published. Required fields are marked *