How do I cancel an ATO payment plan?
Short answer
You cancel a plan in ATO online services, through your tax agent, or by phoning the ATO. Do it once the debt is paid out so the direct debit stops. If the debt is not paid, think twice: a cancelled plan counts the same as a default for the two in 12 months rule, and the whole balance becomes payable at once. See our ATO payment plan guide.
How to cancel
- Online. Individuals and sole traders: myGov, then ATO, then Tax, Payments, Payment plans. Businesses: online services for business, then Accounts and payments, Payment plans. Select the plan and choose to cancel it.
- Through your agent. A registered tax or BAS agent can cancel or vary a plan for you in online services for agents.
- By phone. Call the ATO's debt line on 13 11 42. You will need to prove your identity.
Cancelling the plan also cancels the ATO's direct debit authority for it. If you have set up a separate recurring payment with your own bank, cancel that yourself.
When cancelling is the right move
- You have paid the debt out. Once the account balance is zero, cancel the plan so no further instalments are drawn. Cancelling a plan on a nil balance is not a default. See paying a plan out early.
- The ATO has agreed a replacement. If you have negotiated a new arrangement by phone, the officer will usually close the old plan as part of that conversation. Confirm that is what is happening so you do not end up with two.
- The debt is being dealt with another way. For example, the amount is under dispute and the ATO has agreed to defer recovery, or a formal insolvency process is starting. Get advice before cancelling in these cases.
Thinking of cancelling because you can't keep up?
There is usually a better move. Talk it through first, free and confidential.
When not to cancel
CANCELLING TO ESCAPE AN UNAFFORDABLE PLAN BACKFIRES
The ATO counts cancelled plans and defaulted plans together. Two of either in 12 months closes the online channel for all future plans. Cancelling also makes the full overdue balance immediately payable and can restart firmer action.
If the instalment is too high, vary the plan instead. Online you can reduce instalments or move dates as long as the plan stays within 24 months; beyond that, phone the ATO. Varying keeps the plan alive and keeps you classed as engaging. Read can I change or extend my plan? before doing anything else.
If you genuinely cannot pay at any level, cancelling still does not help. It just removes the protection a plan gives you against garnishee notices and, for business debts of $100,000 or more, credit reporting. The better step is to talk to someone about the alternatives in rescue options while the plan is still on foot.
What happens after you cancel
With a paid out debt, nothing. The account sits at nil and the plan simply disappears from your list. With an unpaid debt, the ATO treats the balance as overdue and immediately payable. GIC continues at 11.43%, compounding daily. Enforcement options reopen, and a second cancellation or default within 12 months will lock you into phone only negotiation, described in what happens after two defaults.
What to do next
- Check the account balance in ATO online services before you cancel anything.
- If the balance is zero, cancel the plan online so the direct debit stops.
- If the balance is not zero and the plan is unaffordable, vary it instead of cancelling.
- If you cannot pay at any level, get advice on the alternatives before touching the plan.
Related questions
Does cancelling an ATO payment plan count as a default?
For the purpose of the rule that closes the online channel, yes. The ATO's wording is two or more payment plans defaulted on or cancelled in the past 12 months. The exception in practice is a plan cancelled because the debt has been paid in full, which the ATO does not treat as a broken arrangement.
Can the ATO cancel my payment plan without telling me?
The ATO can default a plan when its conditions are breached, for example a missed instalment, an unpaid new debt or a late lodgement. It normally sends an arrears letter first and then a default notice, but letters go to your ATO communication preferences, which may be your myGov inbox rather than the post.
Do I need to cancel my payment plan to set up a new one?
Usually not, and cancelling first can cost you. If the instalments no longer fit, vary the existing plan online or by phone and it continues as the same arrangement. If you need a longer term than online services allow, phone the ATO and ask for the new plan to replace the old one in the same call, so there is no gap. Cancelling online and then applying again counts as a cancelled plan for the two in 12 months rule, and it leaves the whole balance immediately payable in between.
Thinking of cancelling because you can't keep up?
There is usually a better move. Talk it through first, free and confidential.
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