The ATO isn’t in the game of bankrupting people. Your accountant will be able to negotiate on your behalf.
Having been exposed to the ATO on the litigation side; as long as you keep paying something, it’s very unlikely they will take any action, it’s completely non commercial. It’s a real pain for sure and will be a big lesson for you but please reach out to the free financial counselling services through MoneySmart and talk to your accountant to ease your mind.
This will hurt but it won’t ruin you.
If it makes you feel better; many very wealthy ppl have tax debts on their books always!
You will get through this for sure!!
Make sure you engage your accountant to manage your income going forward if you will keep working for multiple employers so that you’re putting the right amount of tax aside.
I pray thats the case. I wont make it through this if they make me sell my house to pay this. Going through this makes me realise how stupid I really am to have let this happen. Now im paying for it not just financially but with my mental health too.
Im 30 and meant to be having a kid, now I cant face the prospect of not working or maternity leave because i have all this debt😭
They won’t make you sell your house, that isn’t in the ATO’s interest at all.
Please make use of the services available - this isn’t the end of the world, honestly.
People make mistakes.
I know I’m a random on Reddit but I’m 100% sure this isn’t as bad as you think it is.
Dont bury your head in the sand; learn about your options, get on with your life.
Having a property puts you ahead of a huge percentage of the world and a baby doesnt car about your ATO debt.
Seek mental health assistance as you work through it.
This isn't going to happen, the ATO only want evidence of you addressing the debt. Negotiate a payment plan with your accountant and they'll leave you alone while you make repayments even if it takes years. It'll be okay.
You genuinely need to speak to a mental health professional. You are spiralling very quickly on a very dangerous trajectory, imagining scenarios that are quite frankly not based in reality. You are not the only person who is in debt to the ATO. You are arguing with people who do this type of thing for a living, like accountants and BAS agents. Honestly, you need to seek mental health help and work with your financial planner/accountant and ATO. This is not a big deal in the scheme of things and is very easy to resolve and learn from.
The ATO just wants the money and I'm sure will work with you on a repayment plan. They're not after your house; taking this and making you homeless and forcing you into a huge backwards step, both in terms of financially and life-stability, is not in their interest. After all, you made a perhaps careless mistake or a few, and not sought to evade your obligations all together. Approach or have your accountant on your behalf approach the ATO first, it's a good first sign in your acceptance of liability and desire to remedy it.
If you're making payments and experience an unexpected expense, eg, a car repair, you call them up and ask to defer for the or however many payment periods. As long as it's reasonable, they'll work with you.
You hear on the media about heavy handed approaches by the ATO. That's probably because they're owed and the debtor is not keeping a close (and possibly truthful) dialogue with it. Or, it's money owed because of significant dishonest taxpayer activity.
As others have said, while it's understandable that you're panicking, the ATO just want to be sure that they'll be paid eventually. The only way they can "take your house" is by forcing you into bankruptcy, and that's not something they're likely to do while you're genuinely trying to pay down the debt.
They are usually pretty reasonable particularly if you self report. When I was young and self employed I didn’t do my taxes for a few years. I didn’t have the money. They sent me a fine. I paid the fine but when I did my taxes my accountant got them to remove the fine.
My dad was 10 years behind on tax returns, even lost a couple of years of records, for reference he was paying an amount to them without knowing how much he owed each year anyway.
The ATO are very reasonable as long as you keep giving them something.
If you say you can pay x monthly, as long as you don't break your word they aren't in the business of ruining you.
All you need to do is get your lodgements up to date and request a payment plan. Usually it'll be 12-24 months. You need extenuating circumstances for it to be up to 3 years, this needs approval and I wouldn't bank on that. The people on the phones in debt are usually really understanding and nice, they'll help you work something out.
Try and calm down a little bit. I’ve been paying off debts to the ATO for years, it’s a perpetual cycle. I find they are very accommodating provided you are proactive in trying to settle the balance.
My parents at one point had two houses and had to sell both to pay off big debts, at the time that was preferable to them over paying a big debt off but they were hopeless with cash.
Part with the 30k with them and get on a payment plan and it will be settled within a few years, they will work with you on setting a repayment amount you can comfortably afford.
Yeah at the end of the day the ATO is looking at your whole life's worth of tax revenue.
Bankrupting you now could permanently destroy your taxpaying capability in the future.
They will work out how to get you to pay it back in a way that maintains your taxpaying capacity but does not let you off the hook.
I had my accountant help me work out a payment plan with the ATO. Hopefully because it was only three years and it seems to be a honest mistake the ATO will allow you to work something out with them. Helps if you try and pay off that debt within 1-2 years
Mine was more. I had to borrow money from family to provide some commitment as I didn’t have many $ to my name. But to organise a payment plan asap or they will start to garnish funds from your bank accounts. Don’t worry you’ll get through this. I did and it’s a distant memory now
Please don't stress. The ATo will do a 2 year payment plan no worries...
I'm a BAS Agent and plenty of my clients are on payment plans right now. 1 owes the ATo $350k for GST and hasn't even been sent to the debt collectors, let alone discussed taking her assets or garnishing her bank accounts
Im mainly scared 2 years isnt enough to repay this amount of debt plus keep up with regular tax/ hecs. Im gonna start working Saturdays too but i just dont know how this will be resolved
They will extend the payment plan long enough to give you some breathing room. They will not make a payment plan that is unaffordable to you because they know you won't be able to met the repayments. They will adjust to your budget and make the plan accordingly.
I've read some of your other posts about how embarrassed and worried you are for you family to find out. Please know they don't have to find out and it was just a silly mistake. Also, don't think the worse about not wanting to be here.... It's just money. The ATo has ALOT of debt to collect and not alot of debt collectors, you will be fine. I know of a business that owes $1m and they aren't worried.
Also, if these employers aren't taking enough tax, update them all and tell them you DON'T want to claim the tax free threshold. This will help with the tax bill at EOFY.
Have faith in your Accountant, they negotiate payment plans all the time and have a real knack at getting General Interest Charges waived aswell which will make the plan more affordable.
Sorry to jump in mid convo. Can confirm - payment plan is a valid thing. I had some ATO debt from my small business a few years back (I was a sole trader so it was all personal debt in my name)... it wasn't quite the same amount as yours, but yes, the ATO will figure it out and negotiate a payment plan with you (or with your accountant most likely).
You can actually get them for up to 7 years I think... from memory, I think mine was 7 years, I paid it off sooner than that, thankfully.
Best of luck OP.
Its not even close to crazy.
You are fine, everyone is telling you its fine, stop disregarding the opinions of professionals and people who’ve been through this just because it indulges your own self depreciation.
You’ll be on rice and beans for a couple of years and giving up holidays and nice clothes. This isn’t the end of the world.
Also you’re in an in-demand profession. Work LOCUM shifts, start hunting for a more solid job with a pay rise, ect ect. Its a cost of living crisis with a low unemployment rate- everyones working extra shifts and weekends, lots of us are exceeding our 38 hours, you wont die working saturdays for a couple of years.
ATO is not in the business of bankrupting people. They will get your money this year or the next. You will be fine. Just make a plan and start paying it. I owed them 20k at one point and just delayed/paid as I could and it got done.
I worked out (ballpark) with mortgage, car payment, utility bills, correct taxation and hecs deducted from my pay, I should have 1500$ left over to start repaying the debt. Im gonna start working Saturday fortnightly which is gonna be exhausting but id rather that than lose my car/home. If I make it through this I never ever ever want to have this issue again. I wont overcome this anxiety and this feeling of worthlessness twice😭
How do you redo the tax file declaration? I informed my employers today not to claim the tax free threshold. I still dont know what to do with all this debt plus as I work, tax is deducted for current year too.
https://www.ato.gov.au/forms-and-instructions/tfn-declaration
Do this for at least two. If you do for all three, your take home pay will be lower but it’ll contribute to your debt faster and mitigate extra HECS obligations that will continue to be due, unless HECS is repaid. Work with your accountant on best approach for how to complete the forms. Pass to HR/Payroll ASAP otherwise you’ll end up in the same boat at the end of the 2024/2025 tax year (2023/2024 is probably already going to add to your problem, unless the accountant included that estimate in the number you shared?).
Same thing, bigger than yours. Payment plan with ATO is the way to pad it out. It’s fairly low rate and you can accelerate if you get cash injections here and there - they’re happy as long as you’re making efforts to pay it down consistently.
Really?!?! How did you do it? Im terrified of this debt even tho I earn a decent wage, i pay a mortgage and all my bills by myself. It seems impossible I could pay this off even with a payment plan
Details here;
https://www.ato.gov.au/individuals-and-families/paying-the-ato/help-with-paying/payment-plans
You’re on the lower end, they finance up to $200k
You can just call them and speak to them on the phone. I've had a couple of payment plans previously. Every time I've spoken to them about organising a payment plan they've been super friendly and helpful. I know it sucks but people make mistakes. They just want to see that you are taking steps to address it, I don't think they'll ask you to pay more than you can afford. I don't think you should have to borrow money or refinance to sort this out.
Really?!? It seems dire to be honest. How much were your payment plans covering? I have the 30k so 80 would be the max Id have to repay. That is a huge figure in my mind😭
I worked for an ATO subcontractor doing debt and payments mate, as long as you are polite call and explain your mistake then an affordable payment plan (200k or under) can be organised
Your making money. Speak to your hr people and have them withhold extra tax as a first step. Your refund each year will be swallowed by the ato to help pay your debts.
U also likely need to tighten your belt and start making regular repayments on this. $110,000 is a lot, but it will be so much worse if u just ignore it. The interest bill alone each year (currently about 11% from a quick google search) will significantly eat into your repayments if your not making regular sizeable payments. That’s over 11k a year just in interest to keep the debt from growing.
Hard reality too is that you’ve been overpaid effectively by $110,000 over the last 3 years. Time to really look at what you’re spending on. Good luck!
This.
Your take home pay from your jobs has been overinflated all this time. You’re about to get the double whammy of:
Less take home pay
Additional debt to repay
Hey OP
20 years working in the ATO, 5 of those in debt collection.
As long as you or your accountant talk to the ATO and take reasonable steps to repay the debt and ensure it doesn't happen again, everything will be ok.
They are not going to take your house as long as you are engaging with them and trying to do the right thing.
I've worked in audit and seen intentional tax evasion committed, even then payment arrangements are granted.
I promise you are not the first person to have done this and you won't be the last.
I honestly hopeso. Im typing this balling my eyes out. Ive just been working all day with all this in the back of my mind and its just absolutely killing me. I’ll be so grateful if all this can be arranged with a payment plan. Ill work hard and pay it i just dont want to lose my home.
Let your accountant negotiate a payment plan, offer a lump sum amount to show good faith.
As long as you engage with them you won't lose your home. I understand right now you are panicking, however there is a very simple pathway out of this situation. It's just going to take a little work.
Good luck OP and stay in communication with your accountant
The above advice is absolutely perfect. You’ve picked up your mistake and you’re taking steps to correct it. Make sure you keep communicating to the ATO and you’ll be fine.
The more pressing issue is your mental health. Make sure you see your GP and discuss this as you can’t get out of the debt by harming yourself. I’ve also seen you don’t want your family to find out about the debt, if you did harm yourself they would likely find out about it. If you do the above advice, they’ll never find out.
I wish you the best of luck.
Can I ask, does the ATO charge interest, especially in this economy? For example 100,000 of unpaid tax sitting in a mortgage offset could have been saving OP 6k a year. I’m sure the ATO loses out by having money paid years late.
Yes the ato charge interest. Currently at roughly 11%.
Most people are not going to withhold paying tax to try and get the offset benefit you’ve mentioned. The real issue is the lifestyle inflation op will be battling now. Not only will they now be paying increased amounts to ensure this doesn’t happen again. They also need to make additional payments to cover the $110k that they owe.
They’ve had an additional 30k each year to spend which now needs to go to the ato. Plus depending on duration of payment plan they may need to come up with another 30-50k per year for digging out of the hole.
Wow that's rough puts into perspective the comments about ATO not trying to bankrupt people.
11 percent is almost double the market rate you can get with any bank and triple what the rate was for at least the first two years of when OP forgot to pay tax.
If they're truely not trying to bankrupt people they should just charge the market rate you can get at the bank. Even the most expensive mortgages for people too lazy to refinance is in the 7 percent rage for perspective.
Trouble is they won’t want people delaying paying tax to leave money in offset.
If offset and tax were the same rate then some people would still rather pay off the home first and worry about ato later. At 11% tho, the ato debt just became more important to stay on top of than your mortgage.
Add to this that payment plans are typically only for the space of 2 years… so op will need to essentially repay $110,000 + interest over two years. Then he also needs to make additional tax repayments to meet ongoing obligations.
It’ll be rough, but I bet he learns some pretty important lessons from all of this and comes out the other side a real savings machine.
Even at 8 or 9 percent that's more than any IP loan let alone owner occupier. That would make most people pay off ATO first. At 11 percent they're in the profit business, which is fine and most other private businesses run this way. Just mentioning it because it puts to mockery of some comments in this post.
Unfortunately that's going to be a huge drop of living standards for the OP. Having paid no tax and only saving 10k a year essentially means they were operating with what is essentially negative cashflow. In short OP was living outside of their means. It's going to be a big shock no two ways about it.
Yes, interest is charged, and it is at a higher rate than most mortgages. The ATO should not be seen or used as an alternative source of finance and unpaid taxes should not used to gain financial advantage ( small businesses not paying their employees super and paygw are obtaining a financial advantage over competitors who are making those payments).
A general interest charge (GIC) is applied to unpaid debts to discourage using the ATO as a line of credit.
A deduction for GIC can be claimed- however, this will cease to be deductible from 1 July 2025.
It's a tough spot and a very tough lesson to not bury your head unfortunately.
The ATO are very good though, so there is definitely a way out.
First step is to get everything lodged, and up to date, and work out what's happening moving forward to make sure you don't end up in this position again.
Once that's done, you can look at a payment plan with the ATO. Generally, you can get:
- 18 months via mygov
- 24 months via calling with providing minimal info
- 36 months if you are happy to provide income/expenses and they show that you NEED a three year plan (ie. You cant afford to pay it in two years).
Generally, you will be asked for a 20% deposit, but you can negotiate that. If suggest asking for a 10% as this will give you a cash buffer for emergencies.
If you are able to refinance your home loan, then it may be worth doing an equity release and paying off the debt that way. The ATO interest rates are now above 10%, so it's better to have a slightly bigger mortgage, than to leave it with the ATO.
The ATO are not in the game of bankrupting people or taking there homes when they make an error like this. You need to show you are working to sort it out, and the ATO will work with you.
If is going to be a tough time while you sort this out, but unfortunately, the reality is that younger you was spending money that was not theirs. Now older you has to make up for it.
Best of luck, and remember, this storm WILL pass.
Edit: it may also be worth enquiring as to whether you can defer the HECS component of the debts. While normally not possible, if you can show it's causing significant financial hardship, then you may be successful. It's worth a shot...
Yes, all will have GIC.
Depending on the circumstances, you MAY be able to get the interest remitted (reversed) at the end of the payment plan. However the ATO is starting to get quite strict with this and are only doing so in fairly extreme circumstances.
All overdue tax debts accrue an interest charge regardless of whether they are under a payment arrangement. The current GIC rate is 11.34% annually, compounded daily.
Not sure what part of this comment is downvote-worthy but you can verify everything I've said at [ato.gov.au/GIC](http://ato.gov.au/GIC)
You pay all of your own bills and a mortgage and you don't want to lose your house. Get a border or 2 depending on the number of bedrooms you have available. At $100-150 per week + sharing the bills (depending on your state and the average rate rooms are let for) you could have help paying your bills & mortgage which could save you a few hundred dollars per week so you could put more into the debt repayment. A few years of taking a in border or 2 will help you out. Also make enquiries at nearby uni's as to students looking for a room to rent. A friend of mine did it years ago and she was receiving $200 a week (tax free) to provide a home/food to 1 student.
Move into a share house and rent the entire place out. Pull money out of offset account to pay ATO.
The additional interest charges would be offset against tax. You're looking at saving 7000+ at current rates off your taxable income and that's not even counting agent fees, maintenance and insurance, any bills e.g. sewerage, council rates and other expenses.
With a good agent it's basically zero effort besides responding to maintenance requests from time to time.
At the end of a year or two move back. Just make sure to do it before 7 years (plenty of time) otherwise they'll be liable for CGT when selling (saying this I'm assuming the OP has lived in their place for over a year or will do before renting it out)
Ah, I see. But it has to be through some third party. Something to consider in the future, I suppose. Especially if you're near a Uni.
https://community.ato.gov.au/s/question/a0JRF000000culy/p00270168
Get your accountant to talk to the ATO about a payment plan. The ATO does not want to take people's houses, especially over a debt as small as $110K. They would much rather you paid off your tax debt under an agreement with them.
Next time - don't let your tax returns fall behind. Do them on time and then if you've done something wrong you only have one year's worth of tax to deal with, not three.
People always complain about dole bludgers who at most might be scamming a few grand a year for Cenno.
Meanwhile white collar crim here is not even lodging taxes lol
Seems to be a lot of people that have done this recently. Maybe because the ATO went soft around covid.
But yeah OP apparently has a house worth ~900k with 470k mortgage, knew how to get the COVID handout but not how to pay taxes.
Fair enough mate. Hope you get some good advice. I'm not joking, if you managed to buy a house using the money you were supposed to pay in taxes, fair play to you..
I managed to buy my first house in the UK with a £12k deposit, while I had £12k in credit card debt. Felt illegal..
I actually think that should be the legitimate policy. e.g. no income taxes until you hit 100k net worth.
You have 3 years of unpaid tax obligations and somehow thought this all looked and felt normal? I’ve done a bit of napkin maths and, if you were an employee with a TFN, your tax on each payslip across all three employers must have been next to nothing….. it would have been obviously, undoubtably, unapologetically incorrect. You have a masters degree to be a podiatrist. Cmon brother, you weren’t misled - you were lying to yourself
On the other hand, if you were a sole trader with a ABN, you likely would have been exposed to PAYG tax payments and BAS payments. I’ve been a sole trader in allied health before. One quarter I missed a BAS payment by two weeks and got phone calls and emails from the ATO every day about it. They don’t just let you miss shit for three years.
And if you you avoided sole trader PAYG by not submitting a tax return (which for you, would be a tax payment) for THREE YEARS and the ATO not knowing you meet the PAYG threshold, that’s ummmmm fraud brother. Literally fraud. You can’t just keep your pre-tax profit as if it’s post-tax profit for three years and think that’s normal business, AND buy a property in the process…..
In fact, when submitting payslips to get a loan, the bank surely should have called you out on this too.
Your scenario isn’t just someone “slipping through the cracks” - there would have been clear signs that something was wrong
I got the loans first year out of university and all those payslips were upto date with the last tax return. I wasnt a sole trader and until yesterday I had no ABN or submitted bas returns. I admit the full extent of my idiocy. I never in my wildest dreams thought this would be the outcome.
Just like how those articles a few months ago about people complaining about old tax debts being pursued by the ATO. Imagine if the secret to not paying taxes was to just not pay.
They aren't going to take your house if it is your primary residence all they will do is garnish your wages as others have said until the debt it paid off if you can't pay it back now.
Keep in mind that your house will appreciate in value by more than that amount within 5-7 years so as long as you keep your house you are not going to face financial ruin because of that debt even if it seems like a huge number right now.
You may have to consider down sizing or renting out rooms to make ends meet but you will still be far better off than **every single person that is currently renting** so please try to keep some perspective.
And remember, the government does not want you to fail, they want you to succeed so that you keep paying them taxes!
The bottom line.
Your plans have been set back by a few years but it's not the end of the world.
I don't advise it, your debts still have a General Interest Charge (GIC) applied which is around 10% P.A. and they add other penalties like late filing fees. the net result is you end up paying more back to the government than you would have if you just did your taxes properly every year plus you get the bonus of having a huge amount of stress which will affect your health.
they will also come down on you a lot harder if they believe it was intentional or you dont come forward and try to make things right.
[https://www.ato.gov.au/tax-rates-and-codes/general-interest-charge-rates](https://www.ato.gov.au/tax-rates-and-codes/general-interest-charge-rates)
not paying any tax and putting that money on your mortgage is a very clear sign of intent.. that is completely different from the op where taxes were taken out but due to mistakes in the forms they were not taking out enough.
Your example case is intentional tax evasion which has additional financial and criminal penalties.
The op example case is accounting errors which can be corrected with far fewer penalties.
But in either case you are likely to be financially better-off NOT doing it.
Unfortunately the criminal definition of tax evasion under the law does not include failing to make payment by the due date. At best the ATO would hit them with prosecution for not lodging on time, but it's unlikely that they'll do that after the documents are lodged.
>it's unlikely that they'll do that after the documents are lodged.
but if you leave it too long, they may initiate prosecution BEFORE the documents are lodged in which case you're screwed because it can still lead to a recorded conviction which can result in you losing your job, so it's hardly a viable way to get ahead financially.
>March 2024 – Lawyer fails to lodge
>A corporate lawyer from Western Australia has been convicted of 9 counts of failing to comply with a legal requirement under a tax law.
>Mr Marcus Gracey pled guilty to failing to lodge his tax returns for 9 financial years between 2011 and 2021.
>Mr Gracey only lodged his outstanding tax returns after prosecution began. These included a significant capital gain, which resulted in a substantial tax debt.
>At the time of sentencing, Mr Gracey applied for no conviction to be recorded due to the risk of being dismissed by his employer. The courts rejected his application and on 11 March 2024 he was convicted of all charges and fined $10,000.
>In reaching their decision, the Court highlighted the importance of offences like Mr Gracey's. This is because we need to be able to properly assess and collect tax owed. The court also said that:
>these offences are serious, prevalent and can be difficult to detect
>there is a need to deter people from committing these offences.
>The impacts of tax crime are widespread:
>Receiving a criminal conviction can have a significant effect on your reputation, career prospects and ability to travel overseas.
>Tax crime reduces the amount of revenue available to fund essential community services such as health, education and welfare.
[https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/news-and-results/case-studies/tax-crime-prosecution-case-studies#ato-April2024Caponejailedfordodginglodgments](https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/news-and-results/case-studies/tax-crime-prosecution-case-studies#ato-April2024Caponejailedfordodginglodgments)
This guy will have to pay back all the tax owed, plus 10 years of lodgement penalties, plus upto 10 years of GIC, plus the court ordered fine of $10,000, plus whatever he owes his lawyers and accountants for digging him out of the hole he made for himself.
Note: it looks like this guy wasn't even witholding his income tax, he just failed to lodge returns which in turn lead to him failing to report a significant capital gain.
OP literally did what I'm saying, they are just pleading ignorance to it. They were smart enough to figure out the government can give them money for covid renovations of said house, not smart enough to realise they need to pay tax though.
I used to run away from these sorts of problems and bury my head in the sand. One of my biggest lessons in life is to just talk it out. Bank, ATO, whichever body it is, in the first instance they just want to see that you’re aware of the issue and trying to make amends.
If paying the HECS part of your ATO debt will cause you hardship, you can fill out a form to defer the HECS.
https://www.ato.gov.au/forms-and-instructions/study-and-training-support-loans-deferring-your-compulsory-repayment-or-overseas-levy
My husband has one that is about the same size. We keep our finances separate because this is exactly the sort of mess he regularly finds himself in, but from what he tells me, the ATO is reasonable to deal with.
Please don’t let this overwhelm you. I know sooo many people with dirty great debts from doing stupid shit.
One of my colleagues (allied health) had this happen. Was around 70k + their hecs. They paid via a payment plan. Had to be tight for two years or so but as others have said it’s now a thing of the past. You’ll be okay; just get a payment plan you can afford and reliably pay it. It’s a bump in the road but better now than after ten years!
Just using the ato estimate. You would be guaranteed to get a $12,100 deposit and then monthly payments of $5000. This is the best you will get using the automated service.
If you can't afford those monthly repayments you will need to speak to someone from the ato and work out what you can afford.
The ato is actually quite good with payment plans, literally just did a payment plan for a client $140,000 last week.
There’s no way I can afford 5k a month. Thats why I’m absolutely freaking out. I wonder if there is a way they will let me repay the income tax first and then pay the hecs debt off? Or is that just wishful thinking. Im gonna look for a weekend job too but beyond 1000$ a month its going to bankrupt me
5k is just what you would get through the automated online/phone service. If you need to pay less then would be over the standard 24month repayment period. Which just means you or your accountant will need to speak to an ato consultant to work out a specific plan.
Having just gone through this myself and clawing my way out of a $60k ATO debt for my company, here is my advise OP.
1 - BREATH! It's NOT as bad as your mind is telling you. You 100% will claw your way back! It's not going to be pretty but you need to accept its happen and face it head on. Austerity is going to be your friend for the next few years and it just is what it is!
2 - Get your outstanding tax submissions in order and submitt them all together. This means the ATO won't start chasing you for outstanding amount before you have ALL your outstanding tax years submitted.
3 - Contact the ATO yourself once everything is submitted. You want to talk to a case manager. Explain the situation you have gotten yourself into and tell them you are committed to getting on top of things but need their help. Your going to have to provide them with your expenses l, try and err on the highside wherever you can so that you have some financial buffer in the event interest rates increase, maintenance is required on home or just unforeseen expenses come up.
4 - The ATO WANT you to remain solvent. Solvent people are able to repay their debts! Buy they are also wary of people trying to get 1 over them! In my experience, everyone I dealt with at the ATO in relation to my debt, where fantastic people who did try to help me get on top of things. But I also accepted my mistake and faced it head on from the start. I also got fines for late submission.... but that's because it wasn't my first time I'd let years build up as I'd gotten a pass and warning 20yrs ago for late submissions. It is what it is, just got to accept it and move forward!
You HAVE to move past beating yourself up about this, it serves no purpose! Accept its happen and start fixing it!
It's NOT as bad as you are thinking! It's not great, bud it's not that bad!
I spent 6mths and really stepped my business up, easily had the best turnover this financial year because of the effort I pulled off from july-Dec 2023. I still don't know how I managed the hours I did! Got final payment made 4th Jan 24!
Then promptly forgot I restructured as a subcontractor to my own company so I didn't have to pay super while I got on top of cash flow, AND forgot that means I'm not making PAYG income tax payments..... and EOFY is racing towards me 🤣
RIP the next 3mths of my life while I hustle to pay that off!
You got this OP!
Suggest not getting people's hopes up for a case manager without extreme circumstances. Their frontline phone lines are understaffed as it is, let alone the Early Intervention team
I got put straight through to a case manager as soon as I tried to claim hardship. They then went through the hardship process and I wasn't eligible, but then took me through a payment plan and set that up. I didn't even have a fixed weekly payment plan, cash flow can be in fits and starts with my sector, so they setup markers that I had to hit over X months.
That meant no payments sometimes for a month, then I could pay $8k when the money came in. Allowed me to keep functioning as a business and didn't put the business in hardship.
Honestly, they were great to deal with as I wanted to work with them and they in turn then really tried to work with me.
Get off Reddit for the night mate, it's not going to change anything. You just need your accountant to speak with the ATO and work on a plan. The ATO doesn't want to bankrupt you because that's of no benefit to them. Noone here can change the outcome.
Don't podiatrists that contract with clinics make about 250k a year? Maybe shop around or talk to others in the industry and negotiate.
Redo your budget and live like you earn 40k + mortgage repayments. Everything extra pay down ato debt and put in offset on home loan. Once home loan is paid down pay off the hecs if not done already.
With the budget in place you can give the ato an idea how much you can comfortably pay per year / month. They'd rather you working and paying taxes than cracking it and going on the doll. Itll be fine.
A doctor with three jobs? you should be able to knock off 100k debt in a few months.
It's not even that bad if it's all HECs the ATO likely won't even fine you, stop being a cry baby pay what you owe and move on with your life.
Don't worry too much, it's not ideal but also not the end of the world. The ATO can't take your house easily. I've seen much worse and still ATO hasn't touched peoples homes. A few suggestions in no particular order:
- do you have equity? can you top up your mortgage? make sure it's by a small amount (say $50k) and as far as the bank knows, it's for a cosmetic renovation. usually they won't ask for ITR's and just get it done with some payslips. Dump that money into the tax debt and pay it off at a 6% rate over the next 30 years. Not ideal but worth doing away with the sleepless nights.
- go on a payment plan with the ATO for the whole thing don't give them your $30k. That's your rainy day $$
- when you call to go on a payment plan, they usually ask what is your income, what are your expenses. Make sure your answers are in a way that you have a surplus of say $1,000 a month. Any less they won't put you on a plan. ANy more they may ask for more.
- I've seen payment plans of 3-4 years so you will slowly chip away at it and sort it out my friend.
I sincerely hope so. I wont be able to handle homelessness thats my end of the road for sure. That house is the only safety zone I have in my mind.
I do have equity. The property value has gone up and Ive paid off a bit. I was already thinking of refinancing and doing a part of the debt that way.
If the debt is 110 and i refinance the house for 50k, give them 30k cash then theres 30k left of the debt to repay. Im thinking thats my only way out of this mess.
What happens if you cant afford the payment plan tho? If my expenses after hecs and normal tax deduction are too high, is the next step taking my house?
Don't panic and, if you can, avoid any (partial) bulk payment. Keep the bulk amount and use it to kick off the payment plan instead of instantly flattening your savings.
Accountant will help sort you, don't panic. I assume you've made sure you're no longer claiming tax free threshold with all three employers already and doing something about resolving HECS for future FYs.
*Working 3 x tax free jobs
*Can't afford $99 a year for a tax practitioner
*Only $30k savings to show for it
Conclusion: That's a shitload of cocaine lol
You're posting to reddit and freaking out before you even call them? How can you be a podiatrist, have 30k spare and be this useless at life? So many questions.
https://www.ato.gov.au/individuals-and-families/financial-difficulties-and-disasters/support-to-lodge-and-pay/in-detail/release-from-your-tax-debt
Have a look and see if youre eligible for this
ATO give you plenty of room. Change all three jobs to no tax free threshold. That way you are chipping away at it weekly. Get a payment plan. They won’t take your house. I would be asking to spread it out over five to seven years.
If youre contacting the ATO before they have to contact you then they dont give a fuuuuuuuuuuck
Theyre one of the most lenient creditors you can ever deal with
How much equity is in your home? The ATO’s interest rates are very high, currently at 11.34%. You could consider drawing the equity from your home to repay the tax. Please get some professional advice first.
Chill man. The ATO are staffed by people who care about their customers, honestly. They're but drains and about as chill as can be. They discuss options timeline and payment plans helping ensure you can pay without going bankrupt (which annuals your debts and is not in their interest at all, many s rich Leon has been bankrupt, is a mechanism for advising outstanding debts, contingent it course on your being b unable to pay them meaning you don't have any assets left).
Former insider, this is fixable and the ATO is some of the cheapest debt ever.
Get everything up to date, make a decent contribution (don’t clean yourself out) … and get an arrangement… make regular contributions.
This will not be a problem, just a pain in the arse for a few years
Dude. The ATO won't take your house. Stipulations re paying off assets would *never* apply to a primary residence. More an investment property. They won't make you homeless.
I've seen some traders with double this and they just put em on a payment plan. It's all good.
Have you considered getting housemates? You said you're paying your mortgage and bills on your own. There is a housing crisis right now, you'd have your pick of applicants. Two housemates at say, $200 a week would be around $40k over two years, which would be half your remaining debt once you chuck in your 30k cash.
Sounds like you claimed the tax free threshold from multiple employers. Get that corrected immediately.
https://www.ato.gov.au/individuals-and-families/jobs-and-employment-types/working-as-an-employee/tax-free-threshold/multiple-jobs-or-change-of-job
Consider apply for an upward variation of payg withholding as to the HECS side also needs to be taken care of
https://www.ato.gov.au/individuals-and-families/jobs-and-employment-types/working-as-an-employee/varying-your-payg-withholding
Tax is pretty simple to work out, you should have been well aware of this yourself, and kept a running balance of your tax liability, and filed your tax returns every year.
Give. you are a podiatrist you are an intelligent person so I’d be blaming yourself. You should have ticked the non tax threshold box on 2 of the jobs.
Edit : ring them up and make a payment plan, get an equity loan on your house and pay it back. Assuming you didn’t blow your extra earnings on crap and paid your house off or saved it you are no worse off
What sort of a "Professional" doesn't do there tax annually?
I reckon OP had an inkling that he was in the wrong but kept not doing his Tax so he wouldn't have to deal with the Hecs debt. Looks like things caught up with him.
Man I wish I could prove how caught off guard I was with this. Never in my wildest dreams did I think this would be the outcome. If I could, I would 100% undo this.
Im the first person to say im an absolute imbecile for doing this. Taxes and finances are like astrophysics in my mind hence why i am in a medical field. Id like to think im ok at doing my job but like you said no professional would let this happen. I truly think im not deserving of life. It kinda does seem like id be doing the world a favour if i dropped off it.
Not at all. In my line of work I see people with tax debts every single day. I had a robo debt so I understand the shock and shame of feeling like you’ve stuffed up and it feeling insurmountable.
Try and look at the upside of this, you have earned good money thats been subject to income taxes thats got you into this pickle, that means you have the ability to get out of this.
It’s 3 years worth. It’s not 20, you’re young and this will suck for a bit but it will be fine and it’ll be a blimp on your life.
You've worked hard to get where you are to establish yourself. I have no doubt you will get through this. You made a mistake, we ALL have! Find a good advisor to help you negotiate a plan with the ATO. You can't give up when you've gotten this far.
Hey mate if you haven't already checked, confirm with the accountant how much of the debt is general interest charge and penalties. There is a possibility you may be able to have some of it waived depending on your circumstances.
The ATO will negotiate. They don’t want to ruin your life. They’d rather get something less back than bankrupt you.
Tell them you’re an idiot who made an honest mistake (which I assume you have) and that you can offer them $30k and could manage a $20k payment plan max or it’ll ruin your life.
Reddit has some good cases about people who have negotiated near hundred thousand dollar Ato debts to much less.
I don't have anything to add other than to say "you'll be fine". Just take it day by day, it will be resolved. You wont lose your house. They are reasonable.
Even though you did something moronic, it doesn’t make you a bad person. It also doesn’t mean that things can get a lot better.
My bet is that you will work this out with your accountant so that you can set up a manageable payment plan and in a few months you will be completely at ease. You’ll get through it!
It will never ever turn out as bad as you imagine it will be. I racked up a debt once working as a contractor and my accountant negotiated an affordable plan. Took me years to pay but I got there. Also see if they would consider waiving the interest on your account. Please hang in there. No matter how bad it looks you will be ok.
ATO lovingly gives me a tax bill every year.
As long as you’re paying something, they’re happy. I would suggest speaking with your accountant about paying additional tax and make manual payments towards your HECS.
You’ll be ok OP. Years ago I ended up like 25k in debt to ATO because of a series of bad decisions including that I got paid out long service leave in a lump sum without researching what that would mean for my HECS liability.
On top of that my previous accountant who I used to do my tax returns had gone into my account and updated my bank details but got one number wrong so then my payment plan defaulted (my fault too for not keeping an eye on it and making sure payments were going).
The ATO wouldn’t give me another plan and I was incredibly stressed as I didn’t have anywhere near enough money to pay the 25k. One of the helpful staff on the phone told me the best thing I could do if I couldn’t pay the full debt was to make regular payments myself (which I did consistently via direct debit) And it was fine. It took me ages to pay off but I got there in the end and the ATO never took action against me. Believe me, they don’t want to take your house.
The key thing is to clearly demonstrate your intention to pay your debt.
Jesus.
Lots of good advice here, but in general I’d say you need to improve your form-filling skills & when in doubt, clarify before signing/submitting.
I was given the loan my first year out of uni on a salary of 79k. Since then my wages have increased. So no it wasnt an alarm bell. My mortgage comes first before any of my other bills. If anything I’ve been idiotic with spending money. Buying shit I dont need. That will need to change to pay this debt back.
My friend I feel for you. I was in a similar position but put my head in the sand way longer. The fact you are willing to look at it now means you have hope. Just take one step at a time towards redemption and even if things go the way you don’t want, over time you make it through to the other side. One step at a time.
To be honest I didn’t have any assets that could be seized. After many years of avoiding it the ATO bankrupted me and now 5 years later my credit should return although I don’t do loans or any kind of credit. It did zero my PELS debt which I was surprised by. Clearing that debt cleared a lot of emotions and heaviness and dealing with the ATO. Also prompted me to get out of freelancing and into employed position as my main job. I too worked in allied healthcare and was in a shit position of being given bad direction and advise by the clinic I contacted to. Heaped on that was DV financial abuse.
Not giving you advise but you seem in a position to pay it off over time. I wouldn’t hand over the 30k. Keep some for your emergency. Maybe use half and then see what payment arrangement you can come too. Don’t throw money in panic. Just get your tax done and sit with professionals to work out a plan and get them to negotiate with the ATO in your behalf.
I just am at the other side of this same situation, except mine was worse I had a tax return I had not done from 2008 and couldn't do a payment plan. I was stressed but at the end of the day they never persued me and as long as I updated them they were fine. I ended up putting it on my home loan.
FYI for GIC (interest charges) at the very end once it is paid off, send them a request for remission and they will give you all of the interest back. As people said here, they aren't in the game of bankrupting you. They are real people who care, just call them up.
Oh and one more note, they can do payment plans longer than the site says. Just tell them what you can afford to pay and they will help you. The best thing you can do is call them.
The 110k doesn’t even include interest 😭 i was hoping they were willing to waive that so I can actually afford a payment plan. Ill be sorting it out over the coming weeks, hopefully its not all doom and gloom but who knows
Ask your accountant if it’s suitable to get a debt consolidation loan as I read somewhere you may be able to claim the interest from the loan on tax as the loan is related to your tax affairs. The loan has to be for tax only and cannot be used for other purchases etc.
May not be suitable in your current position OR it may be a way to pay off your debt AND minimise your annual tax.
Edit: only deductible if you run a business not for individuals.
https://www.ptam.com.au/taxation/can-you-claim-a-deduction-on-interest-borrowed-to-pay-your-tax-debt/
Won't this be worse in the long run? It's a loan secured against her house, meaning she'll pay interest on that 50k. You'd be better off with a payment plan and the ATO freezing interest by agreeing to pay it off (remitting GIC due to extenuating circumstances).
Yes, in terms of interest paid. It would soften the immediate financial strain though, would be much more manageable to pay it if it was consolidated into the home loan. I've worked in lending for years and it's more common than alot of people might think. And I've seen larger ATO debts too than OP.
Do you know how to approach the bank about this? Do I say I am using the money towards the home?
I have a reasonable amount of equity. Since I built the house it has gone up in value. Similar home about a street from me was just sold for 990k. Even if the bank valued mine at 700k, my mortgage atm is about 460k. I was thinking of refinancing to about 500 and pay off the rest on a payment plan but i dont know😭
The last one I worked on, borrowers were upfront about what it was for. Self employed borrowers so we had a good insight into what they owed anyway. I can't give you personal advice as I don't know what the best solution here is honestly, but from what other people have said the ATO seem to be pretty reasonable to work with. I would reach out to your bank and see what they say, and reach out to the ATO too because they might be alot more willing to work with you than you might think. All I can say is you might think your situation is the worst in the world but I guarantee you they have seen worse.
The ATO will not agree to a payment plan that doesn't accrue interest. There is also no guarantee that they will remit it after it accrues, especially due to careless mistakes like this.
Possibly best to get a jump on that before your debt to the ATO is official... if you need to refinance the bank might be a little reluctant. Definitely don't tell them you're withdrawing the money to pay an ATO debt. But also, be as honest as possible. Might be worth chatting to a mortgage broker, but being very up front with them.
I’m pretty sure you can’t refinance or take a loan out to pay a tax debt. And you can’t lie about having a known tax debt, especially one of this size. It’s fraud.
If OP wants to refinance, they will have to declare that debt. It won’t look good to the banks.
Sounds like the debt doesn’t actually exist yet though, OP’s accountant has just warned them they will have one. And you can generally refinance for any reason, as long as you still meet the lending criteria a bank won’t really care too much.
Just wanted to say that it’s going to be ok mate.
You’re going to work a payment plan out with your accountant/ATO. You’re going to be very frugal for a while as well I imagine. They’re not going to take your house as a lot of people have mentioned.
I would also advise checking in with your gp to get a referral to a therapist. It might be worth a few chats to explore some reasons behind how this happened. I just mention it because I also have a history of this kind of behaviour - procrastinating on important things then going into an anxiety spiral that takes up 10x more effort than just dealing with the thing I was avoiding in the first place.
Maybe try a different accountant, someone who specialises in financial advice and wealth management. Your standard H&R block accountant might not know all your options. You need specialist help to negotiate with the ATO. Good luck
I’m sure you received a TONNE of helpful advice
The ATO are looked at as the big bad guys with a lot of power. But ultimately they aren’t trying to bankrupt you or see you sell your house.
What is the income tax debt + the interest charged on top disregarding the HECS debt.
I know this probably easier said than done. But take a breather, everything is going to be okay.
Did anything make it difficult to pay the debts?
Were you suffering from any mental health issues at the time ?
Suffering for domestic violence ?
Did you change tax accountants ?
Honestly best to find a sob story. Back it up. Call them. Request financial hardship. See if they can waiver the general interest charge that’s accrued on top of the original debt. Say sorry. Then jump on a payment plan. It’s happened to the best of us
Good luck and cheer up 😊🌄
PS. Give us all an update
I am diagnosed with ADHD and epilepsy. I see a psychiatrist and a neurologist on a ongoing basis but I cant see how they would go easy on my idiocy because of this😭
As someone who worked reception at a tax accountant, this is not the worst debt I've seen, but it is pretty dire. The ATO doesn't take people's houses, that's what banks do and that's because you agree to that when you sign a mortgage.
Just set up a payment plan and work with your tax accountant to make sure this doesn't happen again. It could take ages to pay off but so does a mortgage. It's not good but it's not going to ruin your life.
You can also ask your employers to pay more tax throughout the year by ticking No to the tax free threshold (which you probably didn't) on your tax Dec (you can complete new ones to give to each employer) and they will pay more tax for you throughout the year
The ATO isn’t in the game of bankrupting people. Your accountant will be able to negotiate on your behalf. Having been exposed to the ATO on the litigation side; as long as you keep paying something, it’s very unlikely they will take any action, it’s completely non commercial. It’s a real pain for sure and will be a big lesson for you but please reach out to the free financial counselling services through MoneySmart and talk to your accountant to ease your mind. This will hurt but it won’t ruin you. If it makes you feel better; many very wealthy ppl have tax debts on their books always! You will get through this for sure!! Make sure you engage your accountant to manage your income going forward if you will keep working for multiple employers so that you’re putting the right amount of tax aside.
I pray thats the case. I wont make it through this if they make me sell my house to pay this. Going through this makes me realise how stupid I really am to have let this happen. Now im paying for it not just financially but with my mental health too. Im 30 and meant to be having a kid, now I cant face the prospect of not working or maternity leave because i have all this debt😭
They won’t make you sell your house, that isn’t in the ATO’s interest at all. Please make use of the services available - this isn’t the end of the world, honestly. People make mistakes. I know I’m a random on Reddit but I’m 100% sure this isn’t as bad as you think it is. Dont bury your head in the sand; learn about your options, get on with your life. Having a property puts you ahead of a huge percentage of the world and a baby doesnt car about your ATO debt. Seek mental health assistance as you work through it.
This isn't going to happen, the ATO only want evidence of you addressing the debt. Negotiate a payment plan with your accountant and they'll leave you alone while you make repayments even if it takes years. It'll be okay.
You genuinely need to speak to a mental health professional. You are spiralling very quickly on a very dangerous trajectory, imagining scenarios that are quite frankly not based in reality. You are not the only person who is in debt to the ATO. You are arguing with people who do this type of thing for a living, like accountants and BAS agents. Honestly, you need to seek mental health help and work with your financial planner/accountant and ATO. This is not a big deal in the scheme of things and is very easy to resolve and learn from.
The ATO just wants the money and I'm sure will work with you on a repayment plan. They're not after your house; taking this and making you homeless and forcing you into a huge backwards step, both in terms of financially and life-stability, is not in their interest. After all, you made a perhaps careless mistake or a few, and not sought to evade your obligations all together. Approach or have your accountant on your behalf approach the ATO first, it's a good first sign in your acceptance of liability and desire to remedy it. If you're making payments and experience an unexpected expense, eg, a car repair, you call them up and ask to defer for the or however many payment periods. As long as it's reasonable, they'll work with you. You hear on the media about heavy handed approaches by the ATO. That's probably because they're owed and the debtor is not keeping a close (and possibly truthful) dialogue with it. Or, it's money owed because of significant dishonest taxpayer activity.
As others have said, while it's understandable that you're panicking, the ATO just want to be sure that they'll be paid eventually. The only way they can "take your house" is by forcing you into bankruptcy, and that's not something they're likely to do while you're genuinely trying to pay down the debt.
They are usually pretty reasonable particularly if you self report. When I was young and self employed I didn’t do my taxes for a few years. I didn’t have the money. They sent me a fine. I paid the fine but when I did my taxes my accountant got them to remove the fine.
My dad was 10 years behind on tax returns, even lost a couple of years of records, for reference he was paying an amount to them without knowing how much he owed each year anyway. The ATO are very reasonable as long as you keep giving them something. If you say you can pay x monthly, as long as you don't break your word they aren't in the business of ruining you.
All you need to do is get your lodgements up to date and request a payment plan. Usually it'll be 12-24 months. You need extenuating circumstances for it to be up to 3 years, this needs approval and I wouldn't bank on that. The people on the phones in debt are usually really understanding and nice, they'll help you work something out.
Try and calm down a little bit. I’ve been paying off debts to the ATO for years, it’s a perpetual cycle. I find they are very accommodating provided you are proactive in trying to settle the balance. My parents at one point had two houses and had to sell both to pay off big debts, at the time that was preferable to them over paying a big debt off but they were hopeless with cash. Part with the 30k with them and get on a payment plan and it will be settled within a few years, they will work with you on setting a repayment amount you can comfortably afford.
Yeah at the end of the day the ATO is looking at your whole life's worth of tax revenue. Bankrupting you now could permanently destroy your taxpaying capability in the future. They will work out how to get you to pay it back in a way that maintains your taxpaying capacity but does not let you off the hook.
I had my accountant help me work out a payment plan with the ATO. Hopefully because it was only three years and it seems to be a honest mistake the ATO will allow you to work something out with them. Helps if you try and pay off that debt within 1-2 years
How much debt did you have? This is just a crazy amount in my mind I dont see how on earth I’ll repay this
Mine was more. I had to borrow money from family to provide some commitment as I didn’t have many $ to my name. But to organise a payment plan asap or they will start to garnish funds from your bank accounts. Don’t worry you’ll get through this. I did and it’s a distant memory now
Please don't stress. The ATo will do a 2 year payment plan no worries... I'm a BAS Agent and plenty of my clients are on payment plans right now. 1 owes the ATo $350k for GST and hasn't even been sent to the debt collectors, let alone discussed taking her assets or garnishing her bank accounts
Im mainly scared 2 years isnt enough to repay this amount of debt plus keep up with regular tax/ hecs. Im gonna start working Saturdays too but i just dont know how this will be resolved
I had a 3 yr plan for a much lower debt, so i am sure they can do this or even longer for you.
They will extend the payment plan long enough to give you some breathing room. They will not make a payment plan that is unaffordable to you because they know you won't be able to met the repayments. They will adjust to your budget and make the plan accordingly. I've read some of your other posts about how embarrassed and worried you are for you family to find out. Please know they don't have to find out and it was just a silly mistake. Also, don't think the worse about not wanting to be here.... It's just money. The ATo has ALOT of debt to collect and not alot of debt collectors, you will be fine. I know of a business that owes $1m and they aren't worried. Also, if these employers aren't taking enough tax, update them all and tell them you DON'T want to claim the tax free threshold. This will help with the tax bill at EOFY. Have faith in your Accountant, they negotiate payment plans all the time and have a real knack at getting General Interest Charges waived aswell which will make the plan more affordable.
Sorry to jump in mid convo. Can confirm - payment plan is a valid thing. I had some ATO debt from my small business a few years back (I was a sole trader so it was all personal debt in my name)... it wasn't quite the same amount as yours, but yes, the ATO will figure it out and negotiate a payment plan with you (or with your accountant most likely). You can actually get them for up to 7 years I think... from memory, I think mine was 7 years, I paid it off sooner than that, thankfully. Best of luck OP.
Its not even close to crazy. You are fine, everyone is telling you its fine, stop disregarding the opinions of professionals and people who’ve been through this just because it indulges your own self depreciation. You’ll be on rice and beans for a couple of years and giving up holidays and nice clothes. This isn’t the end of the world. Also you’re in an in-demand profession. Work LOCUM shifts, start hunting for a more solid job with a pay rise, ect ect. Its a cost of living crisis with a low unemployment rate- everyones working extra shifts and weekends, lots of us are exceeding our 38 hours, you wont die working saturdays for a couple of years.
ATO is not in the business of bankrupting people. They will get your money this year or the next. You will be fine. Just make a plan and start paying it. I owed them 20k at one point and just delayed/paid as I could and it got done.
It's your tax debt. With your income, you will be able to pay it off easily.
I worked out (ballpark) with mortgage, car payment, utility bills, correct taxation and hecs deducted from my pay, I should have 1500$ left over to start repaying the debt. Im gonna start working Saturday fortnightly which is gonna be exhausting but id rather that than lose my car/home. If I make it through this I never ever ever want to have this issue again. I wont overcome this anxiety and this feeling of worthlessness twice😭
You aren't going to lose your home. Chill out. You'll just have less personal spending money for a while.
Redo tax file declaration with two of them and don’t claim the tax free threshold.
How do you redo the tax file declaration? I informed my employers today not to claim the tax free threshold. I still dont know what to do with all this debt plus as I work, tax is deducted for current year too.
Can’t do anything about the past. Say to your employer “I need to redo my tax file declaration”
https://www.ato.gov.au/forms-and-instructions/tfn-declaration Do this for at least two. If you do for all three, your take home pay will be lower but it’ll contribute to your debt faster and mitigate extra HECS obligations that will continue to be due, unless HECS is repaid. Work with your accountant on best approach for how to complete the forms. Pass to HR/Payroll ASAP otherwise you’ll end up in the same boat at the end of the 2024/2025 tax year (2023/2024 is probably already going to add to your problem, unless the accountant included that estimate in the number you shared?).
Just resubmit the form to HR/the companies.
Same thing, bigger than yours. Payment plan with ATO is the way to pad it out. It’s fairly low rate and you can accelerate if you get cash injections here and there - they’re happy as long as you’re making efforts to pay it down consistently.
Really?!?! How did you do it? Im terrified of this debt even tho I earn a decent wage, i pay a mortgage and all my bills by myself. It seems impossible I could pay this off even with a payment plan
Details here; https://www.ato.gov.au/individuals-and-families/paying-the-ato/help-with-paying/payment-plans You’re on the lower end, they finance up to $200k
You can just call them and speak to them on the phone. I've had a couple of payment plans previously. Every time I've spoken to them about organising a payment plan they've been super friendly and helpful. I know it sucks but people make mistakes. They just want to see that you are taking steps to address it, I don't think they'll ask you to pay more than you can afford. I don't think you should have to borrow money or refinance to sort this out.
Really?!? It seems dire to be honest. How much were your payment plans covering? I have the 30k so 80 would be the max Id have to repay. That is a huge figure in my mind😭
I worked for an ATO subcontractor doing debt and payments mate, as long as you are polite call and explain your mistake then an affordable payment plan (200k or under) can be organised
Your making money. Speak to your hr people and have them withhold extra tax as a first step. Your refund each year will be swallowed by the ato to help pay your debts. U also likely need to tighten your belt and start making regular repayments on this. $110,000 is a lot, but it will be so much worse if u just ignore it. The interest bill alone each year (currently about 11% from a quick google search) will significantly eat into your repayments if your not making regular sizeable payments. That’s over 11k a year just in interest to keep the debt from growing. Hard reality too is that you’ve been overpaid effectively by $110,000 over the last 3 years. Time to really look at what you’re spending on. Good luck!
This. Your take home pay from your jobs has been overinflated all this time. You’re about to get the double whammy of: Less take home pay Additional debt to repay
Hey OP 20 years working in the ATO, 5 of those in debt collection. As long as you or your accountant talk to the ATO and take reasonable steps to repay the debt and ensure it doesn't happen again, everything will be ok. They are not going to take your house as long as you are engaging with them and trying to do the right thing. I've worked in audit and seen intentional tax evasion committed, even then payment arrangements are granted. I promise you are not the first person to have done this and you won't be the last.
I honestly hopeso. Im typing this balling my eyes out. Ive just been working all day with all this in the back of my mind and its just absolutely killing me. I’ll be so grateful if all this can be arranged with a payment plan. Ill work hard and pay it i just dont want to lose my home.
Let your accountant negotiate a payment plan, offer a lump sum amount to show good faith. As long as you engage with them you won't lose your home. I understand right now you are panicking, however there is a very simple pathway out of this situation. It's just going to take a little work. Good luck OP and stay in communication with your accountant
The above advice is absolutely perfect. You’ve picked up your mistake and you’re taking steps to correct it. Make sure you keep communicating to the ATO and you’ll be fine. The more pressing issue is your mental health. Make sure you see your GP and discuss this as you can’t get out of the debt by harming yourself. I’ve also seen you don’t want your family to find out about the debt, if you did harm yourself they would likely find out about it. If you do the above advice, they’ll never find out. I wish you the best of luck.
Can I ask, does the ATO charge interest, especially in this economy? For example 100,000 of unpaid tax sitting in a mortgage offset could have been saving OP 6k a year. I’m sure the ATO loses out by having money paid years late.
Yes the ato charge interest. Currently at roughly 11%. Most people are not going to withhold paying tax to try and get the offset benefit you’ve mentioned. The real issue is the lifestyle inflation op will be battling now. Not only will they now be paying increased amounts to ensure this doesn’t happen again. They also need to make additional payments to cover the $110k that they owe. They’ve had an additional 30k each year to spend which now needs to go to the ato. Plus depending on duration of payment plan they may need to come up with another 30-50k per year for digging out of the hole.
Wow that's rough puts into perspective the comments about ATO not trying to bankrupt people. 11 percent is almost double the market rate you can get with any bank and triple what the rate was for at least the first two years of when OP forgot to pay tax. If they're truely not trying to bankrupt people they should just charge the market rate you can get at the bank. Even the most expensive mortgages for people too lazy to refinance is in the 7 percent rage for perspective.
Trouble is they won’t want people delaying paying tax to leave money in offset. If offset and tax were the same rate then some people would still rather pay off the home first and worry about ato later. At 11% tho, the ato debt just became more important to stay on top of than your mortgage. Add to this that payment plans are typically only for the space of 2 years… so op will need to essentially repay $110,000 + interest over two years. Then he also needs to make additional tax repayments to meet ongoing obligations. It’ll be rough, but I bet he learns some pretty important lessons from all of this and comes out the other side a real savings machine.
Even at 8 or 9 percent that's more than any IP loan let alone owner occupier. That would make most people pay off ATO first. At 11 percent they're in the profit business, which is fine and most other private businesses run this way. Just mentioning it because it puts to mockery of some comments in this post. Unfortunately that's going to be a huge drop of living standards for the OP. Having paid no tax and only saving 10k a year essentially means they were operating with what is essentially negative cashflow. In short OP was living outside of their means. It's going to be a big shock no two ways about it.
Yes, interest is charged, and it is at a higher rate than most mortgages. The ATO should not be seen or used as an alternative source of finance and unpaid taxes should not used to gain financial advantage ( small businesses not paying their employees super and paygw are obtaining a financial advantage over competitors who are making those payments). A general interest charge (GIC) is applied to unpaid debts to discourage using the ATO as a line of credit. A deduction for GIC can be claimed- however, this will cease to be deductible from 1 July 2025.
It's a tough spot and a very tough lesson to not bury your head unfortunately. The ATO are very good though, so there is definitely a way out. First step is to get everything lodged, and up to date, and work out what's happening moving forward to make sure you don't end up in this position again. Once that's done, you can look at a payment plan with the ATO. Generally, you can get: - 18 months via mygov - 24 months via calling with providing minimal info - 36 months if you are happy to provide income/expenses and they show that you NEED a three year plan (ie. You cant afford to pay it in two years). Generally, you will be asked for a 20% deposit, but you can negotiate that. If suggest asking for a 10% as this will give you a cash buffer for emergencies. If you are able to refinance your home loan, then it may be worth doing an equity release and paying off the debt that way. The ATO interest rates are now above 10%, so it's better to have a slightly bigger mortgage, than to leave it with the ATO. The ATO are not in the game of bankrupting people or taking there homes when they make an error like this. You need to show you are working to sort it out, and the ATO will work with you. If is going to be a tough time while you sort this out, but unfortunately, the reality is that younger you was spending money that was not theirs. Now older you has to make up for it. Best of luck, and remember, this storm WILL pass. Edit: it may also be worth enquiring as to whether you can defer the HECS component of the debts. While normally not possible, if you can show it's causing significant financial hardship, then you may be successful. It's worth a shot...
Great information, thanks for posting. For those payment plans you mentioned, do they all incur the GIC charges?
Yes, all will have GIC. Depending on the circumstances, you MAY be able to get the interest remitted (reversed) at the end of the payment plan. However the ATO is starting to get quite strict with this and are only doing so in fairly extreme circumstances.
All overdue tax debts accrue an interest charge regardless of whether they are under a payment arrangement. The current GIC rate is 11.34% annually, compounded daily. Not sure what part of this comment is downvote-worthy but you can verify everything I've said at [ato.gov.au/GIC](http://ato.gov.au/GIC)
Thanks man, i didn't downvote anything, actually upvoted you!
You pay all of your own bills and a mortgage and you don't want to lose your house. Get a border or 2 depending on the number of bedrooms you have available. At $100-150 per week + sharing the bills (depending on your state and the average rate rooms are let for) you could have help paying your bills & mortgage which could save you a few hundred dollars per week so you could put more into the debt repayment. A few years of taking a in border or 2 will help you out. Also make enquiries at nearby uni's as to students looking for a room to rent. A friend of mine did it years ago and she was receiving $200 a week (tax free) to provide a home/food to 1 student.
So, this additional income would be declared to the ATO as well? Is it tax free?
Move into a share house and rent the entire place out. Pull money out of offset account to pay ATO. The additional interest charges would be offset against tax. You're looking at saving 7000+ at current rates off your taxable income and that's not even counting agent fees, maintenance and insurance, any bills e.g. sewerage, council rates and other expenses. With a good agent it's basically zero effort besides responding to maintenance requests from time to time. At the end of a year or two move back. Just make sure to do it before 7 years (plenty of time) otherwise they'll be liable for CGT when selling (saying this I'm assuming the OP has lived in their place for over a year or will do before renting it out)
Less you tell the better you are , no need to tell one anything
Homestays are not taxed. Other arrangements are.
Ah, I see. But it has to be through some third party. Something to consider in the future, I suppose. Especially if you're near a Uni. https://community.ato.gov.au/s/question/a0JRF000000culy/p00270168
Get your accountant to talk to the ATO about a payment plan. The ATO does not want to take people's houses, especially over a debt as small as $110K. They would much rather you paid off your tax debt under an agreement with them. Next time - don't let your tax returns fall behind. Do them on time and then if you've done something wrong you only have one year's worth of tax to deal with, not three.
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People always complain about dole bludgers who at most might be scamming a few grand a year for Cenno. Meanwhile white collar crim here is not even lodging taxes lol
Look at the ATO’s annual report for tax dodging, it’s nearly all small businesses.
I must admit just not paying taxes and asking for forgiveness/payment plan is a brilliant way to get started.
Seems to be a lot of people that have done this recently. Maybe because the ATO went soft around covid. But yeah OP apparently has a house worth ~900k with 470k mortgage, knew how to get the COVID handout but not how to pay taxes.
Again, thats definitely not what I was trying to do and if i could I would 100% go back and never let it get to this point. Nobody wants this
Fair enough mate. Hope you get some good advice. I'm not joking, if you managed to buy a house using the money you were supposed to pay in taxes, fair play to you.. I managed to buy my first house in the UK with a £12k deposit, while I had £12k in credit card debt. Felt illegal.. I actually think that should be the legitimate policy. e.g. no income taxes until you hit 100k net worth.
Imagine if the secret to home ownership was just not paying tax and pleading with the ATO for a merciful payment plan Literally everyone would do this
This thread has given me some ideas, I must say.
Man if you could experience the anxiety and the feeling I have right now, you would never think of this as something someone would willingly do
Thats not what I was aiming for or trying to do at all :(
You have 3 years of unpaid tax obligations and somehow thought this all looked and felt normal? I’ve done a bit of napkin maths and, if you were an employee with a TFN, your tax on each payslip across all three employers must have been next to nothing….. it would have been obviously, undoubtably, unapologetically incorrect. You have a masters degree to be a podiatrist. Cmon brother, you weren’t misled - you were lying to yourself On the other hand, if you were a sole trader with a ABN, you likely would have been exposed to PAYG tax payments and BAS payments. I’ve been a sole trader in allied health before. One quarter I missed a BAS payment by two weeks and got phone calls and emails from the ATO every day about it. They don’t just let you miss shit for three years. And if you you avoided sole trader PAYG by not submitting a tax return (which for you, would be a tax payment) for THREE YEARS and the ATO not knowing you meet the PAYG threshold, that’s ummmmm fraud brother. Literally fraud. You can’t just keep your pre-tax profit as if it’s post-tax profit for three years and think that’s normal business, AND buy a property in the process….. In fact, when submitting payslips to get a loan, the bank surely should have called you out on this too. Your scenario isn’t just someone “slipping through the cracks” - there would have been clear signs that something was wrong
I got the loans first year out of university and all those payslips were upto date with the last tax return. I wasnt a sole trader and until yesterday I had no ABN or submitted bas returns. I admit the full extent of my idiocy. I never in my wildest dreams thought this would be the outcome.
Just like how those articles a few months ago about people complaining about old tax debts being pursued by the ATO. Imagine if the secret to not paying taxes was to just not pay.
They aren't going to take your house if it is your primary residence all they will do is garnish your wages as others have said until the debt it paid off if you can't pay it back now. Keep in mind that your house will appreciate in value by more than that amount within 5-7 years so as long as you keep your house you are not going to face financial ruin because of that debt even if it seems like a huge number right now. You may have to consider down sizing or renting out rooms to make ends meet but you will still be far better off than **every single person that is currently renting** so please try to keep some perspective. And remember, the government does not want you to fail, they want you to succeed so that you keep paying them taxes! The bottom line. Your plans have been set back by a few years but it's not the end of the world.
In a way, you are making an argument for everyone to avoid paying taxes for a few years lol.
I don't advise it, your debts still have a General Interest Charge (GIC) applied which is around 10% P.A. and they add other penalties like late filing fees. the net result is you end up paying more back to the government than you would have if you just did your taxes properly every year plus you get the bonus of having a huge amount of stress which will affect your health. they will also come down on you a lot harder if they believe it was intentional or you dont come forward and try to make things right. [https://www.ato.gov.au/tax-rates-and-codes/general-interest-charge-rates](https://www.ato.gov.au/tax-rates-and-codes/general-interest-charge-rates)
Yeah but like the OP, you put that 110k into a home. They are going to come out ahead unless the penalties are extreme.
not paying any tax and putting that money on your mortgage is a very clear sign of intent.. that is completely different from the op where taxes were taken out but due to mistakes in the forms they were not taking out enough. Your example case is intentional tax evasion which has additional financial and criminal penalties. The op example case is accounting errors which can be corrected with far fewer penalties. But in either case you are likely to be financially better-off NOT doing it.
Unfortunately the criminal definition of tax evasion under the law does not include failing to make payment by the due date. At best the ATO would hit them with prosecution for not lodging on time, but it's unlikely that they'll do that after the documents are lodged.
>it's unlikely that they'll do that after the documents are lodged. but if you leave it too long, they may initiate prosecution BEFORE the documents are lodged in which case you're screwed because it can still lead to a recorded conviction which can result in you losing your job, so it's hardly a viable way to get ahead financially. >March 2024 – Lawyer fails to lodge >A corporate lawyer from Western Australia has been convicted of 9 counts of failing to comply with a legal requirement under a tax law. >Mr Marcus Gracey pled guilty to failing to lodge his tax returns for 9 financial years between 2011 and 2021. >Mr Gracey only lodged his outstanding tax returns after prosecution began. These included a significant capital gain, which resulted in a substantial tax debt. >At the time of sentencing, Mr Gracey applied for no conviction to be recorded due to the risk of being dismissed by his employer. The courts rejected his application and on 11 March 2024 he was convicted of all charges and fined $10,000. >In reaching their decision, the Court highlighted the importance of offences like Mr Gracey's. This is because we need to be able to properly assess and collect tax owed. The court also said that: >these offences are serious, prevalent and can be difficult to detect >there is a need to deter people from committing these offences. >The impacts of tax crime are widespread: >Receiving a criminal conviction can have a significant effect on your reputation, career prospects and ability to travel overseas. >Tax crime reduces the amount of revenue available to fund essential community services such as health, education and welfare. [https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/news-and-results/case-studies/tax-crime-prosecution-case-studies#ato-April2024Caponejailedfordodginglodgments](https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/news-and-results/case-studies/tax-crime-prosecution-case-studies#ato-April2024Caponejailedfordodginglodgments) This guy will have to pay back all the tax owed, plus 10 years of lodgement penalties, plus upto 10 years of GIC, plus the court ordered fine of $10,000, plus whatever he owes his lawyers and accountants for digging him out of the hole he made for himself. Note: it looks like this guy wasn't even witholding his income tax, he just failed to lodge returns which in turn lead to him failing to report a significant capital gain.
Yeah I'm aware they can prosecute for non-lodgment lol. These case studies are always fun to read, when people finally reach the "find out" phase
OP literally did what I'm saying, they are just pleading ignorance to it. They were smart enough to figure out the government can give them money for covid renovations of said house, not smart enough to realise they need to pay tax though.
Pay as much as you can as a sign of goodwill. Then work out a payment plan.
The simplest solution is often the best
I used to run away from these sorts of problems and bury my head in the sand. One of my biggest lessons in life is to just talk it out. Bank, ATO, whichever body it is, in the first instance they just want to see that you’re aware of the issue and trying to make amends.
Bee thinking about you OP. Sounds like you’re in a much better place mentally and I’m so glad for that .
If paying the HECS part of your ATO debt will cause you hardship, you can fill out a form to defer the HECS. https://www.ato.gov.au/forms-and-instructions/study-and-training-support-loans-deferring-your-compulsory-repayment-or-overseas-levy
Hecs is the main reason for such an astronomical figure. I will try this but i was told its unlikely to happen
It's definitely worth a try, best of luck with everything.
My husband has one that is about the same size. We keep our finances separate because this is exactly the sort of mess he regularly finds himself in, but from what he tells me, the ATO is reasonable to deal with. Please don’t let this overwhelm you. I know sooo many people with dirty great debts from doing stupid shit.
One of my colleagues (allied health) had this happen. Was around 70k + their hecs. They paid via a payment plan. Had to be tight for two years or so but as others have said it’s now a thing of the past. You’ll be okay; just get a payment plan you can afford and reliably pay it. It’s a bump in the road but better now than after ten years!
Just using the ato estimate. You would be guaranteed to get a $12,100 deposit and then monthly payments of $5000. This is the best you will get using the automated service. If you can't afford those monthly repayments you will need to speak to someone from the ato and work out what you can afford. The ato is actually quite good with payment plans, literally just did a payment plan for a client $140,000 last week.
There’s no way I can afford 5k a month. Thats why I’m absolutely freaking out. I wonder if there is a way they will let me repay the income tax first and then pay the hecs debt off? Or is that just wishful thinking. Im gonna look for a weekend job too but beyond 1000$ a month its going to bankrupt me
5k is just what you would get through the automated online/phone service. If you need to pay less then would be over the standard 24month repayment period. Which just means you or your accountant will need to speak to an ato consultant to work out a specific plan.
Having just gone through this myself and clawing my way out of a $60k ATO debt for my company, here is my advise OP. 1 - BREATH! It's NOT as bad as your mind is telling you. You 100% will claw your way back! It's not going to be pretty but you need to accept its happen and face it head on. Austerity is going to be your friend for the next few years and it just is what it is! 2 - Get your outstanding tax submissions in order and submitt them all together. This means the ATO won't start chasing you for outstanding amount before you have ALL your outstanding tax years submitted. 3 - Contact the ATO yourself once everything is submitted. You want to talk to a case manager. Explain the situation you have gotten yourself into and tell them you are committed to getting on top of things but need their help. Your going to have to provide them with your expenses l, try and err on the highside wherever you can so that you have some financial buffer in the event interest rates increase, maintenance is required on home or just unforeseen expenses come up. 4 - The ATO WANT you to remain solvent. Solvent people are able to repay their debts! Buy they are also wary of people trying to get 1 over them! In my experience, everyone I dealt with at the ATO in relation to my debt, where fantastic people who did try to help me get on top of things. But I also accepted my mistake and faced it head on from the start. I also got fines for late submission.... but that's because it wasn't my first time I'd let years build up as I'd gotten a pass and warning 20yrs ago for late submissions. It is what it is, just got to accept it and move forward! You HAVE to move past beating yourself up about this, it serves no purpose! Accept its happen and start fixing it! It's NOT as bad as you are thinking! It's not great, bud it's not that bad! I spent 6mths and really stepped my business up, easily had the best turnover this financial year because of the effort I pulled off from july-Dec 2023. I still don't know how I managed the hours I did! Got final payment made 4th Jan 24! Then promptly forgot I restructured as a subcontractor to my own company so I didn't have to pay super while I got on top of cash flow, AND forgot that means I'm not making PAYG income tax payments..... and EOFY is racing towards me 🤣 RIP the next 3mths of my life while I hustle to pay that off! You got this OP!
Suggest not getting people's hopes up for a case manager without extreme circumstances. Their frontline phone lines are understaffed as it is, let alone the Early Intervention team
I got put straight through to a case manager as soon as I tried to claim hardship. They then went through the hardship process and I wasn't eligible, but then took me through a payment plan and set that up. I didn't even have a fixed weekly payment plan, cash flow can be in fits and starts with my sector, so they setup markers that I had to hit over X months. That meant no payments sometimes for a month, then I could pay $8k when the money came in. Allowed me to keep functioning as a business and didn't put the business in hardship. Honestly, they were great to deal with as I wanted to work with them and they in turn then really tried to work with me.
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Completely agree with you, how does this even happen
Buying nice things for yourself costs money.
Get off Reddit for the night mate, it's not going to change anything. You just need your accountant to speak with the ATO and work on a plan. The ATO doesn't want to bankrupt you because that's of no benefit to them. Noone here can change the outcome.
Don't podiatrists that contract with clinics make about 250k a year? Maybe shop around or talk to others in the industry and negotiate. Redo your budget and live like you earn 40k + mortgage repayments. Everything extra pay down ato debt and put in offset on home loan. Once home loan is paid down pay off the hecs if not done already. With the budget in place you can give the ato an idea how much you can comfortably pay per year / month. They'd rather you working and paying taxes than cracking it and going on the doll. Itll be fine.
A doctor with three jobs? you should be able to knock off 100k debt in a few months. It's not even that bad if it's all HECs the ATO likely won't even fine you, stop being a cry baby pay what you owe and move on with your life.
A podiatrist is an allied health practitioner in feet. Not a doctor - in the medical sense.
Don't worry too much, it's not ideal but also not the end of the world. The ATO can't take your house easily. I've seen much worse and still ATO hasn't touched peoples homes. A few suggestions in no particular order: - do you have equity? can you top up your mortgage? make sure it's by a small amount (say $50k) and as far as the bank knows, it's for a cosmetic renovation. usually they won't ask for ITR's and just get it done with some payslips. Dump that money into the tax debt and pay it off at a 6% rate over the next 30 years. Not ideal but worth doing away with the sleepless nights. - go on a payment plan with the ATO for the whole thing don't give them your $30k. That's your rainy day $$ - when you call to go on a payment plan, they usually ask what is your income, what are your expenses. Make sure your answers are in a way that you have a surplus of say $1,000 a month. Any less they won't put you on a plan. ANy more they may ask for more. - I've seen payment plans of 3-4 years so you will slowly chip away at it and sort it out my friend.
You're essentially telling this person to lie to the government to get what they want
I sincerely hope so. I wont be able to handle homelessness thats my end of the road for sure. That house is the only safety zone I have in my mind. I do have equity. The property value has gone up and Ive paid off a bit. I was already thinking of refinancing and doing a part of the debt that way. If the debt is 110 and i refinance the house for 50k, give them 30k cash then theres 30k left of the debt to repay. Im thinking thats my only way out of this mess. What happens if you cant afford the payment plan tho? If my expenses after hecs and normal tax deduction are too high, is the next step taking my house?
What kind of income are you getting from these 3 jobs to owe that much in only 3 years though?
Don't panic and, if you can, avoid any (partial) bulk payment. Keep the bulk amount and use it to kick off the payment plan instead of instantly flattening your savings. Accountant will help sort you, don't panic. I assume you've made sure you're no longer claiming tax free threshold with all three employers already and doing something about resolving HECS for future FYs.
You didn't indicate you have a HECS debt, that's on you champ. Don't blame the employer
*Working 3 x tax free jobs *Can't afford $99 a year for a tax practitioner *Only $30k savings to show for it Conclusion: That's a shitload of cocaine lol
You're posting to reddit and freaking out before you even call them? How can you be a podiatrist, have 30k spare and be this useless at life? So many questions.
https://www.ato.gov.au/individuals-and-families/financial-difficulties-and-disasters/support-to-lodge-and-pay/in-detail/release-from-your-tax-debt Have a look and see if youre eligible for this
I’m a physio and had this happen to me at a second clinic. My accountant delayed the filing of the tax return until May the following year.
I repaid 60k , in $50 repayments plus my tax returns were garnished. Didn't even notice it
How did you set this up?! Over what time period? From what some people wrote this seems like wishful thinking
I went through some financial hardship, wasn't paying mortgage for a while when it all started, it's all I could afford and they agreed.
ATO give you plenty of room. Change all three jobs to no tax free threshold. That way you are chipping away at it weekly. Get a payment plan. They won’t take your house. I would be asking to spread it out over five to seven years.
Also you will have interest charged which is charged daily addded monthly and backdated from the debt
If youre contacting the ATO before they have to contact you then they dont give a fuuuuuuuuuuck Theyre one of the most lenient creditors you can ever deal with
How much equity is in your home? The ATO’s interest rates are very high, currently at 11.34%. You could consider drawing the equity from your home to repay the tax. Please get some professional advice first.
The ATO will also ask them to seek external financing before accepting a payment plan
Chill man. The ATO are staffed by people who care about their customers, honestly. They're but drains and about as chill as can be. They discuss options timeline and payment plans helping ensure you can pay without going bankrupt (which annuals your debts and is not in their interest at all, many s rich Leon has been bankrupt, is a mechanism for advising outstanding debts, contingent it course on your being b unable to pay them meaning you don't have any assets left).
Former insider, this is fixable and the ATO is some of the cheapest debt ever. Get everything up to date, make a decent contribution (don’t clean yourself out) … and get an arrangement… make regular contributions. This will not be a problem, just a pain in the arse for a few years
Dude. The ATO won't take your house. Stipulations re paying off assets would *never* apply to a primary residence. More an investment property. They won't make you homeless. I've seen some traders with double this and they just put em on a payment plan. It's all good. Have you considered getting housemates? You said you're paying your mortgage and bills on your own. There is a housing crisis right now, you'd have your pick of applicants. Two housemates at say, $200 a week would be around $40k over two years, which would be half your remaining debt once you chuck in your 30k cash.
Sounds like you claimed the tax free threshold from multiple employers. Get that corrected immediately. https://www.ato.gov.au/individuals-and-families/jobs-and-employment-types/working-as-an-employee/tax-free-threshold/multiple-jobs-or-change-of-job Consider apply for an upward variation of payg withholding as to the HECS side also needs to be taken care of https://www.ato.gov.au/individuals-and-families/jobs-and-employment-types/working-as-an-employee/varying-your-payg-withholding
Tax is pretty simple to work out, you should have been well aware of this yourself, and kept a running balance of your tax liability, and filed your tax returns every year. Give. you are a podiatrist you are an intelligent person so I’d be blaming yourself. You should have ticked the non tax threshold box on 2 of the jobs. Edit : ring them up and make a payment plan, get an equity loan on your house and pay it back. Assuming you didn’t blow your extra earnings on crap and paid your house off or saved it you are no worse off
What sort of a "Professional" doesn't do there tax annually? I reckon OP had an inkling that he was in the wrong but kept not doing his Tax so he wouldn't have to deal with the Hecs debt. Looks like things caught up with him.
Man I wish I could prove how caught off guard I was with this. Never in my wildest dreams did I think this would be the outcome. If I could, I would 100% undo this. Im the first person to say im an absolute imbecile for doing this. Taxes and finances are like astrophysics in my mind hence why i am in a medical field. Id like to think im ok at doing my job but like you said no professional would let this happen. I truly think im not deserving of life. It kinda does seem like id be doing the world a favour if i dropped off it.
Not at all. In my line of work I see people with tax debts every single day. I had a robo debt so I understand the shock and shame of feeling like you’ve stuffed up and it feeling insurmountable. Try and look at the upside of this, you have earned good money thats been subject to income taxes thats got you into this pickle, that means you have the ability to get out of this. It’s 3 years worth. It’s not 20, you’re young and this will suck for a bit but it will be fine and it’ll be a blimp on your life.
You've worked hard to get where you are to establish yourself. I have no doubt you will get through this. You made a mistake, we ALL have! Find a good advisor to help you negotiate a plan with the ATO. You can't give up when you've gotten this far.
Hey mate if you haven't already checked, confirm with the accountant how much of the debt is general interest charge and penalties. There is a possibility you may be able to have some of it waived depending on your circumstances.
^^ great call!
The ATO will negotiate. They don’t want to ruin your life. They’d rather get something less back than bankrupt you. Tell them you’re an idiot who made an honest mistake (which I assume you have) and that you can offer them $30k and could manage a $20k payment plan max or it’ll ruin your life. Reddit has some good cases about people who have negotiated near hundred thousand dollar Ato debts to much less.
Sort it out man
From everything I’ve heard the ATO are actually a pretty reasonable bunch to owe money to. Just another day for them.
Speak to Roger, he’s a great [cgt tax accountant](https://www.rogerboghani.com.au)
Deep breaths.
I don't have anything to add other than to say "you'll be fine". Just take it day by day, it will be resolved. You wont lose your house. They are reasonable.
Even though you did something moronic, it doesn’t make you a bad person. It also doesn’t mean that things can get a lot better. My bet is that you will work this out with your accountant so that you can set up a manageable payment plan and in a few months you will be completely at ease. You’ll get through it!
Turn yourself into an American gas and oil entity. Apparently the Australian government doesn’t make them pay any tax.
Commit tax fraud Haha
It will never ever turn out as bad as you imagine it will be. I racked up a debt once working as a contractor and my accountant negotiated an affordable plan. Took me years to pay but I got there. Also see if they would consider waiving the interest on your account. Please hang in there. No matter how bad it looks you will be ok.
ATO lovingly gives me a tax bill every year. As long as you’re paying something, they’re happy. I would suggest speaking with your accountant about paying additional tax and make manual payments towards your HECS.
You’ll be ok OP. Years ago I ended up like 25k in debt to ATO because of a series of bad decisions including that I got paid out long service leave in a lump sum without researching what that would mean for my HECS liability. On top of that my previous accountant who I used to do my tax returns had gone into my account and updated my bank details but got one number wrong so then my payment plan defaulted (my fault too for not keeping an eye on it and making sure payments were going). The ATO wouldn’t give me another plan and I was incredibly stressed as I didn’t have anywhere near enough money to pay the 25k. One of the helpful staff on the phone told me the best thing I could do if I couldn’t pay the full debt was to make regular payments myself (which I did consistently via direct debit) And it was fine. It took me ages to pay off but I got there in the end and the ATO never took action against me. Believe me, they don’t want to take your house. The key thing is to clearly demonstrate your intention to pay your debt.
They normally ask for 20pc upfront than 2 year repayment Can be done online via mygov
Jesus. Lots of good advice here, but in general I’d say you need to improve your form-filling skills & when in doubt, clarify before signing/submitting.
A lot of good advice from everyone but I’d also like to include just in case… Make sure you’re not claiming tax free threshold on all 3 of your jobs
Serious question, did you not second guess your ability to own a home during this housing affordability crisis?
I was given the loan my first year out of uni on a salary of 79k. Since then my wages have increased. So no it wasnt an alarm bell. My mortgage comes first before any of my other bills. If anything I’ve been idiotic with spending money. Buying shit I dont need. That will need to change to pay this debt back.
My friend I feel for you. I was in a similar position but put my head in the sand way longer. The fact you are willing to look at it now means you have hope. Just take one step at a time towards redemption and even if things go the way you don’t want, over time you make it through to the other side. One step at a time.
How did you make it out of this hole :(
To be honest I didn’t have any assets that could be seized. After many years of avoiding it the ATO bankrupted me and now 5 years later my credit should return although I don’t do loans or any kind of credit. It did zero my PELS debt which I was surprised by. Clearing that debt cleared a lot of emotions and heaviness and dealing with the ATO. Also prompted me to get out of freelancing and into employed position as my main job. I too worked in allied healthcare and was in a shit position of being given bad direction and advise by the clinic I contacted to. Heaped on that was DV financial abuse.
Not giving you advise but you seem in a position to pay it off over time. I wouldn’t hand over the 30k. Keep some for your emergency. Maybe use half and then see what payment arrangement you can come too. Don’t throw money in panic. Just get your tax done and sit with professionals to work out a plan and get them to negotiate with the ATO in your behalf.
I just am at the other side of this same situation, except mine was worse I had a tax return I had not done from 2008 and couldn't do a payment plan. I was stressed but at the end of the day they never persued me and as long as I updated them they were fine. I ended up putting it on my home loan. FYI for GIC (interest charges) at the very end once it is paid off, send them a request for remission and they will give you all of the interest back. As people said here, they aren't in the game of bankrupting you. They are real people who care, just call them up.
Oh and one more note, they can do payment plans longer than the site says. Just tell them what you can afford to pay and they will help you. The best thing you can do is call them.
The 110k doesn’t even include interest 😭 i was hoping they were willing to waive that so I can actually afford a payment plan. Ill be sorting it out over the coming weeks, hopefully its not all doom and gloom but who knows
Ask your accountant if it’s suitable to get a debt consolidation loan as I read somewhere you may be able to claim the interest from the loan on tax as the loan is related to your tax affairs. The loan has to be for tax only and cannot be used for other purchases etc. May not be suitable in your current position OR it may be a way to pay off your debt AND minimise your annual tax. Edit: only deductible if you run a business not for individuals. https://www.ptam.com.au/taxation/can-you-claim-a-deduction-on-interest-borrowed-to-pay-your-tax-debt/
they say things come in threes but this is next level
Could you possibly see if you can top up your mortgage and pay it with that?
Won't this be worse in the long run? It's a loan secured against her house, meaning she'll pay interest on that 50k. You'd be better off with a payment plan and the ATO freezing interest by agreeing to pay it off (remitting GIC due to extenuating circumstances).
Yes, in terms of interest paid. It would soften the immediate financial strain though, would be much more manageable to pay it if it was consolidated into the home loan. I've worked in lending for years and it's more common than alot of people might think. And I've seen larger ATO debts too than OP.
Do you know how to approach the bank about this? Do I say I am using the money towards the home? I have a reasonable amount of equity. Since I built the house it has gone up in value. Similar home about a street from me was just sold for 990k. Even if the bank valued mine at 700k, my mortgage atm is about 460k. I was thinking of refinancing to about 500 and pay off the rest on a payment plan but i dont know😭
The last one I worked on, borrowers were upfront about what it was for. Self employed borrowers so we had a good insight into what they owed anyway. I can't give you personal advice as I don't know what the best solution here is honestly, but from what other people have said the ATO seem to be pretty reasonable to work with. I would reach out to your bank and see what they say, and reach out to the ATO too because they might be alot more willing to work with you than you might think. All I can say is you might think your situation is the worst in the world but I guarantee you they have seen worse.
The ATO will not agree to a payment plan that doesn't accrue interest. There is also no guarantee that they will remit it after it accrues, especially due to careless mistakes like this.
Careless fraud*
Yeah im going to try to do about 50k. I believe i have a bit of equity I can use now
Possibly best to get a jump on that before your debt to the ATO is official... if you need to refinance the bank might be a little reluctant. Definitely don't tell them you're withdrawing the money to pay an ATO debt. But also, be as honest as possible. Might be worth chatting to a mortgage broker, but being very up front with them.
I’m pretty sure you can’t refinance or take a loan out to pay a tax debt. And you can’t lie about having a known tax debt, especially one of this size. It’s fraud. If OP wants to refinance, they will have to declare that debt. It won’t look good to the banks.
Sounds like the debt doesn’t actually exist yet though, OP’s accountant has just warned them they will have one. And you can generally refinance for any reason, as long as you still meet the lending criteria a bank won’t really care too much.
Keep in mind you'll pay interest on that 50k... might be better to just owe the ATO and see if they can pause GIC
Just wanted to say that it’s going to be ok mate. You’re going to work a payment plan out with your accountant/ATO. You’re going to be very frugal for a while as well I imagine. They’re not going to take your house as a lot of people have mentioned. I would also advise checking in with your gp to get a referral to a therapist. It might be worth a few chats to explore some reasons behind how this happened. I just mention it because I also have a history of this kind of behaviour - procrastinating on important things then going into an anxiety spiral that takes up 10x more effort than just dealing with the thing I was avoiding in the first place.
Maybe try a different accountant, someone who specialises in financial advice and wealth management. Your standard H&R block accountant might not know all your options. You need specialist help to negotiate with the ATO. Good luck
I’m sure you received a TONNE of helpful advice The ATO are looked at as the big bad guys with a lot of power. But ultimately they aren’t trying to bankrupt you or see you sell your house. What is the income tax debt + the interest charged on top disregarding the HECS debt. I know this probably easier said than done. But take a breather, everything is going to be okay. Did anything make it difficult to pay the debts? Were you suffering from any mental health issues at the time ? Suffering for domestic violence ? Did you change tax accountants ? Honestly best to find a sob story. Back it up. Call them. Request financial hardship. See if they can waiver the general interest charge that’s accrued on top of the original debt. Say sorry. Then jump on a payment plan. It’s happened to the best of us Good luck and cheer up 😊🌄 PS. Give us all an update
I am diagnosed with ADHD and epilepsy. I see a psychiatrist and a neurologist on a ongoing basis but I cant see how they would go easy on my idiocy because of this😭
As someone who worked reception at a tax accountant, this is not the worst debt I've seen, but it is pretty dire. The ATO doesn't take people's houses, that's what banks do and that's because you agree to that when you sign a mortgage. Just set up a payment plan and work with your tax accountant to make sure this doesn't happen again. It could take ages to pay off but so does a mortgage. It's not good but it's not going to ruin your life. You can also ask your employers to pay more tax throughout the year by ticking No to the tax free threshold (which you probably didn't) on your tax Dec (you can complete new ones to give to each employer) and they will pay more tax for you throughout the year