When an individual fails to pay their ATO debt on time, a penalty for late payment is applied. This is called General Interest Charged (GIC). The GIC rate is updated quarterly and currently (July to September 2019) sits at 8.54%.
This means, for a $100,000 ATO debt, the GIC is $8,540pa or, $711pm.
Some lenders allow pay out of ATO debts and can equate to substantial saving to the individual. There are no restrictions to the level of ATO debt to be paid out, provided it is paid out in full at settlement (no residual debt accepted post settlement).
Below is a comparison between two lenders (using the above example);
Benefits of paying out ATO debts are as follows;
- Finalising an outstanding debt with ATO (can commence debt recovery immediately)
- Consolidating a high interest-bearing account
- Increase cash flow