What happens if an individual has difficulty paying a tax debt?

There are very serious consequences to not paying your taxation debts and returning your income tax return on time, which is why it is always best to use income tax professionals and tax accountants based in and around Brisbane, Cairns, Ipswich, Bundaberg, Townsville, the Gold Coast and Cairns. They will be able to advise you on the process of tax debt repayment and as tax agents they can support and help you through the process of liaising with the Australian Tax Office or ATO. There are several procedures that you can go through if you do have difficulty paying your tax debt and these are as follows:

Communicate with the ATO 
Whatever you do, don’t delay in getting in touch with the Tax Office, your tax agent can do this on your behalf but you need to make sure that you inform them of your circumstances as soon as possible.

Self-help service
If the tax debt that you have a problem paying is less than $25,000 then you need to telephone the ATO automated self-help service. You can use this service to apply to make a late payment, or make an application to pay off your debt in instalments. If you have previously gone through your finances with an income tax accountant or professional, you will be able to work out how much that you can commit to paying back, including any interest rate on the repayments. This will make the self-help service so much easier if you are forearmed with this information. There is an online calculator as well that you can use to work out how quickly it will take you to pay off a tax debt, and this is important as it takes into account the interest that will be charged.

Prepare records of your financial outgoings and income
This is where your tax accountant can be of help, as you will need to ensure that all your outgoings and financial commitments are evidenced and recorded. This includes any financial responsibilities for dependants, your expenditure and loans. Include any loans or repayments such as the compulsory Higher Education Loan Program (HELP) or the Student Financial Supplement repayments (SFSS). If you are requesting delaying your payment or claiming hardship difficulties then the ATO may need to see your evidence. Getting your income tax accountants or agents to prepare this in advance will prove useful and also focuses your mind on what monies you have to manage in your budget.

Telephone and speak with a member of the ATO support staff 
There are people at the ATO who are specially trained to deal with circumstances such as yours, and their aim is not to cause you further distress or financial hardship. They are there to help resolve your tax debts and to help you wherever possible, this means considering each case on its own individual merits. If paying off your tax debt will mean going without food or rent for your home, then they will discuss whether you are eligible to apply for a tax debt release.

Otherwise you can work with the ATO staff to negotiate additional time to pay your debt, and then you need to sit down with your income tax professional and work out how to pay back your tax, whilst ensuring you don’t get into the same position in the new income tax year.

Following these simple steps can be the difference between amassing large tax debts and suffering the consequences of not paying, or taking a sensible and planned approach to dealing with tax repayments, giving you and your dependants, greater peace of mind.

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If you live in Brisbane, Cairns, Townsville, Ipswich, Bundaberg or the Gold Coast, a professionally trained tax agent will be able to assist you at ITP Qld where no upfront fee is necessary.