Extensions of time and payment by instalments

The commissioner may grant an extension of time or allow payment by instalments, if satisfied that the taxpayer really cannot afford to pay on time.

Even if an extension is granted, however, the amount outstanding will generally attract the 20% per year late payment penalty, with remission for deserving cases (ruling IT 2091).

How long?

An extension will not normally exceed three months, and will not go beyond 15 June in the tax year the assessment was issued.

Making an application

Applications for an extension of time or payment by instalments should include:

the taxpayer’s file number, the assessment number, the tax year, the amount involved and the due date
a brief statement of reasons, including the taxpayer’s financial position
a definite offer to pay
- by a specific date, or
- by instalments beginning and ending on specific dates.

Ideally, an application should be made at least 10 days before the due date for payment, but the commissioner may extend this time.

If the unpaid tax exceeds $2000 or the extension sought exceeds three months, the commissioner’s usual practice is to require a detailed statement of the taxpayer’s assets and liabilities with the application.

If additional tax is to be avoided, proof of the taxpayer’s ‘innocence’ (that is, that their inability to pay was not their fault) will need to be shown in the application.

If the taxpayer is also lodging an objection

Separate letters should be written for objections and applications for time to pay even if they are about the same matter, because these issues are dealt with by different parts of the ATO.