What Happens If I Can't Pay My BAS or Tax on Time?

If you can't pay in full by the due date, lodge on time anyway — that alone avoids a separate late-lodgement penalty. Then contact the ATO or set up a payment plan before, or as soon as possible after, the due date. Interest will still apply to the unpaid amount, but a payment plan avoids firmer recovery action and shows you're actively managing the debt rather than ignoring it.

• Failure to lodge penalty. Applies if you don't lodge the BAS or return by the due date — currently charged in increments for every 28 days it remains outstanding. This is entirely avoidable: lodge on time even if you can't pay yet.

• General Interest Charge (GIC). Applies to any amount that remains unpaid after the due date, compounding daily. Since 1 July 2025, GIC is no longer tax-deductible — making it a genuinely more expensive cost to carry than it used to be.

The two are independent — you can be charged both, or just one, depending on whether you lodged and whether you paid. Lodging on time eliminates one of them entirely, which is why it's worth doing even when payment isn't possible yet.

1. Lodge the BAS or return, even if you can't pay — this stops the failure-to-lodge penalty accruing.

2. Use the ATO's online payment plan estimator to see realistic instalment options and the interest involved.

3. Set up the plan through ATO online services for debts under $200,000, or by phone for larger amounts.

4. Make the required upfront payment, if applicable, and begin instalments on the agreed schedule.

5. Keep every future BAS and tax obligation lodged and paid on time — this is a strict condition of keeping the plan active.

A payment plan doesn't pause the clock — GIC continues to accrue on the outstanding balance throughout the plan, and it's calculated to be repaid within the shortest period realistically achievable. It also doesn't create any breathing room on future obligations: your next BAS or tax bill is still due in full and on time, alongside your existing instalments. A payment plan that only accounts for the old debt, without leaving room for new obligations as they arise, tends to break down.

If paying would genuinely cause serious financial hardship, it's worth knowing the ATO has separate hardship provisions beyond a standard payment plan, including the ability to apply for a release from an eligible debt in defined circumstances. This is a different and more involved process than a standard instalment arrangement, and generally worth approaching with professional advice.

• Have I lodged on time, even if I can't pay the full amount yet?

• Have I contacted the ATO or set up a payment plan, rather than staying silent?

• Does my payment plan realistically account for upcoming obligations, not just the current debt?

• If this is a recurring pattern rather than a one-off, do I understand why it keeps happening?

The ATO explains what to do if you can't lodge or pay on time, including the payment plan estimator.

ato.gov.au — If you are finding it hard to lodge and pay on time https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/business-activity-statements-bas/what-if-you-can-t-lodge-and-pay-on-time

• you're facing a BAS or tax debt you can't pay and want help structuring a realistic payment plan;

• missed payments have become a recurring pattern rather than a one-off;

• you're concerned about serious financial hardship and want to understand what options genuinely exist; or

• you want help understanding why the shortfall keeps happening, not just managing the debt once it exists.

→ How Much Should I Put Aside for BAS and Tax?

→ Understanding BAS — What Am I Actually Reporting and Paying?

→ My Business Is Making a Profit — So Why Is There No Money in the Bank?

SKC Accounting | Knowledge Centre | Knowledge Guide 030

Last reviewed: August 2026

General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.