How To Pay The ATO Payment Methods, Plans & What Happens If You Don't Pay (2025-26)

If you have just received a notice of assessment and the number is bigger than you expected, you are not alone. Thousands of Australians face unexpected tax bills every year, and the worst thing you can do is ignore them. The ATO charges interest that compounds daily, can garnishee your bank account without a court order, and now reports debts over $100,000 to credit agencies. But here is the thing: the ATO would rather work with you than against you. This guide explains every way to pay, how to negotiate a payment plan you can actually afford, and the steps you can take today to stop interest from spiralling.

Key Takeaways

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  The ATO accepts payment via BPAY, direct debit, credit card, direct deposit, Government EasyPay, and Australia Post.
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  Every ATO payment requires a Payment Reference Number (PRN) to be allocated to the correct account.
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  Payment plans are available for debts under $200,000 online or by phoning the ATO for larger debts.
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  GIC accrues daily at approximately 10.96% per annum (April 2026). From 1 July 2025, GIC is no longer tax-deductible.
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  The ATO can take enforcement action, including garnishee notices, DPNs, and credit reporting for debts over $100,000.

How to Pay the ATO: All Payment Methods

The ATO accepts several payment methods. Each requires your Payment Reference Number (PRN), found on your notice of assessment or in ATO online services

1. BPAY

Pay from any Australian bank account through your financial institution’s internet banking, phone banking, or mobile app. Use the ATO’s biller code and your PRN. Processing time: 1 to 3 business days.

2. Direct Debit

Authorise the ATO to debit payments directly from your bank account on a scheduled basis. Set up through ATO online services. Ideal for payment plan instalments.

3. Credit or Debit Card

Pay with Visa, MasterCard, or American Express through ATO online services. A card payment fee of 0.60% to 1.45% applies depending on card type.

4. Direct Deposit (EFT)

Transfer funds to the ATO’s bank account using the BSB and account number listed on the ATO’s How to pay page. Include your PRN as the payment reference.

5. Government EasyPay

Make payments at participating Australia Post offices using cash, cheque, or EFTPOS with your payment slip or PRN.

6. Australia Post

Pay at any Australia Post outlet with your payment slip. Cash, cheque, and EFTPOS accepted. 3 to 5 business days processing.

7. International Payments

Pay from overseas via SWIFT transfer using the ATO’s international banking details listed on the ATO website.

What Is a Payment Reference Number (PRN)?

A PRN is a unique identifier linking your payment to the correct ATO account. Find it on your notice of assessment, activity statement, in ATO online services via myGov, or by phoning 13 28 61 (individuals) or 13 72 26 (businesses). Each obligation (income tax, BAS) has a different PRN

How to Check How Much You Owe

Check your balance through ATO online services via myGov, Online services for business, or by phoning the ATO. Your balance shows outstanding income tax, BAS amounts, super obligations, and any accrued GIC. Lodge any overdue tax returns first.

ATO Payment Plans: How They Work

If you cannot pay in full, the ATO allows instalment payment plans. Plans are available to individuals, sole traders, companies, partnerships, trusts, and BAS agents.

Debts Under $200,000

Set up online through ATO online services if lodgements are current. Use the ATO’s payment plan estimator to calculate affordable instalments and see GIC impact.

Debts Over $200,000

Phone the ATO on 13 11 42 or have a tax professional negotiate on your behalf. The ATO may request financial statements and a cash flow forecast.

Key Rules

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  GIC continues to accrue on the unpaid balance for the life of the plan.
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  Tax refunds and credits are offset against your debt. This does not replace scheduled instalments.
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  You must continue lodging all future tax returns and activity statements on time.
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  You can make additional payments or pay off the full balance at any time.
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  Income tax and activity statement debts require separate payment plans.
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  Missing a payment triggers a notice. Continued default may cancel the plan entirely.

General Interest Charge (GIC): What It Costs You

The ATO applies the General Interest Charge to unpaid tax debts. GIC compounds daily at approximately 10.96% per annum (April 2026). Check the current GIC rate on the ATO website.

GIC Is No Longer Tax-Deductible (From 1 July 2025)

From 1 July 2025, GIC incurred on tax debts is no longer deductible on your tax return. This applies regardless of when the underlying debt arose. For a $50,000 debt unpaid for 12 months at 10.96%, you accrue roughly $5,480 in non-deductible interest.

GIC Cost Examples

What Happens If You Don’t Pay the ATO

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  Offsetting: The ATO automatically applies refunds and credits to your outstanding debt.
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  Garnishee notices: The ATO can direct your bank, employer, or debtors to redirect funds to the ATO.
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  Director Penalty Notices: For company directors, failure to pay PAYG or super can result in personal liability.
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  Credit reporting: Debts over $100,000 that are 90+ days overdue can be reported to credit agencies.
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  Legal action: Wind-up orders, bankruptcy proceedings, or property caveats in serious cases.

What You Should Do If You Can’t Pay

Contact the ATO or your tax agent before the due date. The ATO is more willing to negotiate when you communicate proactively. At The Kalculators, we regularly negotiate payment plans on behalf of our clients. Contact us at (08) 7480 2593 or book an appointment.

Tips to Avoid ATO Debt

1. Set Aside Tax As You Earn

Open a separate savings account. For sole traders, set aside 25-30% of gross income for income tax and GST.

2. Lodge On Time

Late lodgement attracts penalties on top of tax owed. Our bookkeeping services include BAS preparation and lodgement reminders.

3. Use a Registered Tax Agent

A registered tax agent can lodge your tax return and BAS with extended deadlines and identify missed deductions.

4. Review PAYG Instalments Quarterly

If instalments are too low, you face a large year-end bill. Review and vary through the ATO online services.

5. Plan for BAS Before the Due Date

Weekly or monthly bookkeeping ensures your records are current and BAS can be lodged accurately.