If you’re dealing with cancer and worried about managing your income tax, there are ways to reduce your tax debt and ease financial stress.
Learn more about:
- Overview
- Paying your tax debt by instalments
- Asking for interest charges to be reduced
- How to set up a payment plan with the ATO
- Applying for a release of your tax debt
- Video: Debts and everyday expenses
Overview
If you owe tax and are concerned about being able to pay it on time, call the Australian Taxation Office (ATO) on 13 11 42 as soon as possible. It is still important to lodge your tax return or business activity statements (BAS) on time, even if you know you can’t pay the tax. This avoids late lodgement penalties and shows that you are trying to meet your obligations.
Depending on your circumstances, the ATO may decide to give you more time to pay or agree to one of the following measures.
Pay your tax debt by instalments
If you have a tax debt and you cannot pay it in full, you may be able to pay in weekly, fortnightly or monthly instalments. This is called a payment plan.
Depending on the amount you owe, there are different ways to set up a new payment plan with the ATO. The ATO’s online payment plan estimator can help you work out how to pay your debt.
Visit the ATO and search for payment plan estimator, or ask a financial counsellor for help.
Ask for interest charges to be reduced
The ATO charges interest on unpaid tax debts. This general interest charge (GIC) starts from the original due date, even if you enter into a payment plan. If you are experiencing financial difficulties because of cancer, you can ask to have some or all of the GIC reduced or cancelled. This is known as the remission of GIC.
Contact the ATO on 13 11 42 and explain why your payment was delayed and any steps you took to avoid the delay. For larger amounts, you may be asked to put your request in writing.
How to set up a payment plan with the ATO
For income tax debt, have your tax file number (TFN) ready. For business activity statement (BAS) debt, have your Australian business number (ABN) ready.
| Use the online service | debt under $200,000 | Visit my.gov.au and link your myGov account to the ATO. myGov is a secure way to connect with various government services. You can create an account if you don’t have one already. |
| Call the automated phone service | debt under $200,000 | Call 13 28 65 (individuals) or 13 72 26 (businesses) and follow the prompts. You can suggest a payment arrangement. If this is accepted, the ATO will send you a confirmation letter. |
| Speak to a customer service officer | debt over $200,000 | Call 13 11 42 to speak to someone at the ATO. They will ask about your financial situation, such as why you haven’t been able to pay and how you plan to pay the debt. |
Apply for a release of your tax debt
You can apply to have some types of tax debt permanently removed (released). You will need to show that paying the debt would cause you serious hardship. This means you would be unable to provide food, housing, medical care or other essentials for yourself or your family.
Use the ATO’s Debt release tool to work out if you are eligible to apply for a release of your tax debt and to get the application form. You will need to provide pay slips and bank statements. You can also call 13 11 42 to discuss your options.
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Video: Debts and everyday expenses
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HWL Ebsworth Lawyers, Sydney, NSW; Leigh Aitken, Consumer; Mary Bairstow, Senior Social Worker, Cancer Centre, Fiona Stanley Hospital, WA; Lynette Brailey, Team Leader Financial Counselling, Cancer Council NSW; Corinne Jones and Siew Tan, Financial Counsellors, Cancer Council VIC; Penny Jacomos, Social Worker, Asbestos Diseases Society of South Australia, SA; Dr Deme Karikios, Head of Department – Medical Oncology, Nepean Cancer and Wellness Centre, Nepean Hospital, NSW; Valerie Parsons, 13 11 20 Consultant, Cancer Council SA; Viridian Financial Group, Melbourne, VIC.
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