In the experience of Grauf O’Brien Lawyers, the ATO are not unreasonable when it comes to entering into ATO payment arrangements.
Setting up an ATO payment arrangement will be depend on how you or your business is structured.
In some instances, the ATO will seek to include a general interest charge (GIC) on amounts that are outstanding. The interest rate for GIC is indexed and varies from period to period, however it is not dissimilar from normal commercial rates of interest.
With that said, if you operate a small business and you have an outstanding debt on your activity statement, the ATO may be able to offer interest-free payment arrangements.
Previously, the ATO have been reluctant to enter into payment arrangements for the payment of tax debts over long periods of time. This is because ATO payment arrangements only deal with current obligations, not future obligations.
However, recently, the ATO have been empowered to accept security over real property in exchange for longer payment arrangements or delayed payment of a tax debt. The ATO will often take a second ranking mortgage over your home or investment property to secure the payment of the outstanding tax debt.
Once substantial compliance with an ATO debt has occurred, it may be possible (hugely subjective) to apply for a GIC remittance. This, effectively, means that the GIC portion is removed.
The ATO has very good systems in place that allow an individual or business to simply enter into payment arrangements. However, if you have a long history no non-compliance with the ATO, have not paid tax in a long time, or have defaulted on previous ATO payment arrangements – then we strongly recommend you speak with a solicitor or accountant to liaise with the ATO on your behalf.
If you have defaulted on previous ATO payment arrangements, and your business (or you personally) are unlikely to be in a position to satisfy the current and future ATO taxation obligations, then we strongly recommend you contact Grauf O’Brien Lawyers to discuss your obligations and options that might assist moving forward.