Interest-free payment plans for BAS debts

Cashflow pressures can hit even the most diligent business owners, and when BAS debts fall overdue, the penalties can pile up quickly. The good news is that the ATO offers an interest free payment plan for BAS debt for businesses that meet certain criteria.

Who is eligible for an interest free payment plan?

You may qualify if your business meets all of the following conditions:

• Has an annual turnover under $2 million

• Owes $50,000 or less in recent BAS/IAS amounts that have been overdue for up to 12 months

• Has a good payment and lodgment history, including:

  • No more than one payment plan default in the past 12 months

  • No outstanding activity statement lodgements

• Can’t access finance (e.g. a bank loan) through normal business channels

• Can demonstrate ongoing business viability

👉 For full eligibility details, see the ATO Payment plans – interest-free payment plans for overdue activity statement amounts

How the BAS debt payment plan works

If you’re eligible, the ATO requires you to agree to a direct debit payment plan that clears the amount within 12 months. While their letters may still mention interest, it will be remitted as long as you keep up with the plan.

It’s also essential to keep all future BAS and tax obligations up to date while the plan is active.

Why an interest free payment plan matters

Overdue BAS debts usually attract the ATO’s general interest charge (GIC), which can grow fast and make it even harder to manage cashflow. An interest free arrangement not only reduces financial stress but also helps you stay compliant while protecting your business’s viability.

Key takeaway for business owners

If your business is struggling to pay a BAS or IAS debt, don’t ignore it. An interest free payment plan for BAS debt could give you breathing space to recover. At Inspire, we can help assess whether you qualify and assist in setting up a plan with the ATO.