Can't pay the ATO? How to prepare for the first phone call

There’s a particular kind of dread that comes with calling the tax office about money you don’t have. Owners put it off for weeks, sometimes months, hoping a good month will make the call unnecessary. Meanwhile, interest accrues and the letters get firmer. The call itself is rarely as bad as the waiting — especially if you walk in prepared.

Why call at all?

Because silence is the one thing guaranteed to make it worse. In late 2024, the ATO told tax professionals it would focus on businesses that ignore its reminders, and would move more quickly to firmer actions such as director penalty notices and garnishees for those that don’t engage or set up arrangements. It also pointed to options like payment plans, deferrals and interest remissions for those who do engage.

Put simply, the ATO treats a business that calls very differently from one that doesn’t.

What should I do before I dial?

Preparation turns a nervous call into a business conversation. Work through this list first.

1. Lodge anything outstanding. The ATO asks you to lodge on time even if you can’t pay. For a company, lodging BAS also protects directors from a lockdown DPN.
2. Get your balance by tax type. GST, PAYG withholding, super guarantee charge, income tax, PAYG instalments. Your accountant or ATO online services can provide it.
3. Check what letters you’ve received. A notice of intent, a DPN or a garnishee changes the conversation. Our ATO letters decoded page explains each one.
4. Work out what you can really pay. Look at the next three months: current BAS, super, wages, rent. What’s left is what you can offer.
5. Know your story in three sentences. What happened, what’s changed, and why you’ll be able to pay.
6. Have your details ready. ABN or TFN, your role, and authority to speak for the business if you’re not the registered contact.

What should I actually say?

Keep it short and specific. A structure that works:

Part of the call	What to say
Opening	“I’m calling about the business’s overdue balance. I want to sort it out.”
Situation	Two or three sentences on what happened — a lost customer, a slow season, a late-paying client
What’s changed	Why the business can now meet obligations — a new contract, cost cuts, improved trading
Proposal	A specific amount now and a specific instalment amount and frequency
Questions	See the next section
Close	Confirm what’s been agreed and how it will be confirmed in writing

Make the proposal realistic. A plan you keep for six months is worth far more than one you break in six weeks — defaulting can bring firmer action faster.

What should I ask the ATO?

Don’t hang up without asking:

• What exactly is owed, by tax type, and does it include interest?
• Is any firmer action pending — a DPN, garnishee, disclosure or legal action? If so, what are the dates?
• What would the ATO accept if your proposal isn’t enough?
• Can interest be remitted, in part, given the circumstances? (Ask, and follow up in writing.)
• What do I need to keep doing for the arrangement to stay in place — usually lodging and paying new amounts on time?
• Who do I contact if something changes?

Write down the name of the person you spoke to, the date, time and any reference number.

What if the plan can’t work?

Sometimes, after doing the numbers honestly, a payment plan just doesn’t fit. The instalments plus future BAS would drain the account every month. Or firmer action has already started. Or you’ve already broken one plan.

That’s when paying the ATO out with a business loan becomes the better route. It ends interest (and ATO interest from 1 July 2025 isn’t tax deductible), stops firmer action in one step, and gives you a repayment schedule set by a lender who is comfortable waiting. Lenders we work with offer property-secured loans between $20,000 and $5,000,000 and unsecured options typically from $5,000 to $500,000. If that sounds like your situation, let’s look at it together — no credit check is involved in asking.

Our pages on second mortgages for tax debt and the full ATO debt triage cover the options in detail.

What should I do after the call?

• Confirm in writing. Send a short message summarising what was agreed, with dates and amounts.
• Set up the payments. Automate instalments if you can.
• Keep lodging on time. Most arrangements depend on it.
• Diarise any deadlines you were told about. The debt letter triage tool will count them.
• Review monthly. If cash flow tightens again, call early rather than miss an instalment.

An illustrative example

Illustrative only. A Canberra consultancy owner owes two quarters of GST and PAYG withholding after a government contract was delayed. She’s put off calling for two months. Before finally ringing, she lodges the outstanding BAS, gets the balance by tax type from her accountant, and works out that she can pay a lump sum now and a set monthly instalment.

On the call, she explains the delay in three sentences, notes that the contract has now started, and makes her offer. The ATO agrees to a plan and tells her that lodging and paying future BAS on time is a condition. She confirms everything by message that afternoon.

Three months later, a second contract is delayed. Rather than risk defaulting on the plan, she uses an unsecured facility sized on her turnover to pay the remaining ATO balance in full, and repays the facility as the contracts pay.

What if I’ve already had letters?

If a garnishee is in force, start with our page on stopping an ATO garnishee. If you have a DPN or statutory demand, the call to the ATO is still worthwhile, but the deadline on the letter is the one that counts — work out your funding route in parallel, not after.

It also helps to have your paperwork in order before any conversation with the ATO or a lender. Our debt rescue document pack lists everything.

What are the most common mistakes on the call?

• Offering more than you can pay. Relief at getting through can lead to an optimistic promise. Stick to the number you worked out beforehand.
• Forgetting future lodgements. Most arrangements depend on keeping new BAS and returns current. Build those into your cash-flow plan before you agree.
• Not asking about pending action. If a DPN has already been issued, a payment plan doesn’t stop its 21-day clock. Ask directly.
• Arguing about the past. How the debt arose matters briefly; what you’ll do now matters far more.
• Not writing anything down. Without names, dates and reference numbers, a misunderstanding later is hard to fix.

Should my accountant make the call instead?

Sometimes that’s sensible. A registered tax or BAS agent can speak to the ATO for you, knows the language, and may already have the figures in front of them. The trade-off is time: if your agent is busy, the call may wait days. For larger or more complex debts, a joint approach works well — you set the proposal with your accountant, and whichever of you can call soonest makes the call. Just don’t let “the accountant is handling it” become a reason nothing happens.

Want a backup plan before you make the call?

Walking into the ATO call knowing you have a funded alternative changes how it feels. You’re negotiating from a position of choice, not desperation.

We help owners with ATO debt every day. Enquiring takes about 60 seconds and there’s no credit check at that stage. Your details aren’t shopped around to a string of lenders; one real person looks at your situation and calls you. Please be accurate about the ATO balance, the tax types and any letters received, so we can tell you whether a pay-out is realistic before you pick up the phone.

Get your funded backup plan ready →