Missed an ATO payment plan instalment? What to do now

Why do payment plans slip?

Almost nobody sets up an ATO payment plan intending to miss an instalment. It usually happens because the plan was set up for one debt, and then life kept going: the next quarter’s BAS arrived, a customer paid late, payroll grew. The plan instalment and the new tax bills started competing for the same cash — and one of them lost.

That pattern is worth recognising, because it points to the right fix. If the plan slipped because of a one-off event, getting back on track may be enough. If it slipped because the plan and the ongoing tax bills together are more than the business can carry, a reset is likely to slip again.

What does a missed instalment actually mean?

The ATO’s payment plan guidance is direct: if you don’t make your payments, your plan may default, making the full overdue balance immediately payable. In practice, the ATO’s response depends on your history and whether you engage — but the risk is that a manageable monthly amount becomes a single large debt overnight.

Meanwhile, the underlying debt keeps growing. The ATO confirms that tax debts on a payment plan continue to accrue general interest charge, which compounds daily, and ATO interest incurred on or after 1 July 2025 isn’t tax-deductible.

There’s also a reporting line to be aware of. The ATO can disclose a business’s tax debt to credit reporting bureaus when at least $100,000 is overdue by more than 90 days, the business has an ABN, and it isn’t engaging with the ATO to manage the debt. Engaging is the part you control.

What should you do this week?

Day 1 — contact the ATO. Whether the instalment is at risk or already missed, make contact before the ATO’s next step. Explain what happened and what you can do. If you have a tax agent, ask them to make the call — they often have faster access.

Day 1 — pay what you can. A partial payment demonstrates intent and reduces the balance.

Days 1–2 — get your numbers straight. From ATO online services, get the current balance, what’s overdue, and when the next BAS or PAYG instalment falls due. Quarterly BAS is due 28 October, 28 February, 28 April and 28 July.

Days 2–3 — decide: reinstate or refinance? Use the questions below.

Ongoing — keep lodging on time. Whatever you decide, new lodgements should be on time. It’s one of the first things the ATO looks at.

Reinstate the plan, or refinance the balance?

Ask yourself honestly:

Question	Points to reinstating	Points to refinancing
Why was the instalment missed?	A one-off event, now resolved	Plan plus new BAS bills is too much each month
How long would a new plan run?	A few months	A year or more
What’s the balance?	Modest	Large, or approaching reporting thresholds
Is the debt blocking anything?	No	A lease, refinance or purchase is waiting
Will the ATO agree a new plan?	Likely, given your history	Uncertain after a default

The ATO’s alternative payment plans page also describes interest-free arrangements for some small businesses — turnover under $2 million, activity statement debts of $50,000 or less, overdue up to 12 months. If you fit, check it before borrowing.

If refinancing looks right, make a 60-second enquiry with the balance and your next due dates. For more on the trade-offs, read tax debt business finance.

What does refinancing an ATO debt look like?

The loan pays the ATO balance in full, ideally along with any current BAS, so the tax account is clear. From then on, you have one repayment on known terms, and new tax bills stand on their own rather than stacking on a plan.

• Larger balances: a property-secured loan from $20,000 to $5,000,000 over residential or commercial property. $20k to $250k is possible same day and up to $5m within 24–48 hours. See borrowing against property fast.
• Smaller balances, trading business: unsecured cash-flow funding, typically $5,000 to $500,000, sized on turnover and bank statements.

ATO debt and past credit issues are considered case by case. Being upfront about the default, the balance and your lodgement position is the quickest way to a realistic answer — see credit issues and urgent finance.

An illustrative example

Illustrative only. A landscaping company set up a $64,000 ATO plan in February, at $5,400 a month. By September, the plan has been kept for seven months, but a wet winter cut revenue and the July–September BAS of $38,000 is due on 28 October. The September instalment is missed.

The director calls the ATO the next day with the company’s tax agent, pays $2,000, and confirms that the BAS will be lodged on time. After that payment, the remaining plan balance is about $27,000; with the new BAS, the total tax exposure is about $65,000. Rather than restart a plan that would run into next year alongside more BAS quarters, the director arranges unsecured funding sized on the company’s turnover to clear both. The tax account is clear before 28 October, and the business carries one repayment through the quieter months.

How do you stop it happening again?

• Separate tax money. Move GST and withheld PAYG into a separate account each week.
• Diarise every instalment and due date with a reminder a week before. Our business bill calendar shows how.
• Call before you miss, not after. A conversation before a due date keeps more options open.
• Check your PAYG instalments with your accountant if your income has changed. See unexpected tax bill.

What should you say when you call the ATO?

Keep it short, honest and specific. A useful structure:

1. What happened — for example, a large customer paid late, or a seasonal dip was deeper than expected.
2. What you’ve paid today and what you can pay in the coming weeks.
3. Where your lodgements stand — ideally, all up to date.
4. What you’re doing about it — for example, arranging finance to clear the balance by a specific date, or proposing a revised plan you’re confident you can keep.

If you’re arranging finance, say so and give a realistic date. The ATO deals with businesses in difficulty every day; what it looks for is engagement and a credible plan. Keep a note of who you spoke to, when, and what was agreed.

Could you be eligible for an interest-free arrangement?

The ATO’s alternative payment plans page describes interest-free payments over 12 months for some small businesses that owe activity statement amounts. The page sets out criteria including annual turnover under $2 million and activity statement debts of $50,000 or less that have been overdue for up to 12 months. If your situation fits, check the details with the ATO or your tax agent — it may be a better option than either reinstating a standard plan or refinancing. If it doesn’t fit, the comparison above still applies.

Whichever route you take, set a calendar reminder a week before every future instalment and BAS due date. Most defaults aren’t caused by a lack of money on the day so much as a clash nobody saw coming a week earlier — and a reminder gives you time to make the call before the date rather than after it.

Get the tax account clear

A missed instalment isn’t the end of the road, but it’s a signal to act while you still have choices. Tell us the balance, what’s overdue and what’s coming up. There’s no credit check when you first enquire, your details won’t be shared around a group of lenders, and a real person looks at the whole tax picture and calls you. Please fill in the form accurately, including the ATO balance and whether the plan has defaulted, so we can put the right option in front of you first time. The triage checker can give you a quick read first.

See if you qualify →