ATO debt loans

How do business tax debts build up?

Rarely through one big mistake. More often it’s a quarter where cash was tight, so the BAS was lodged but not paid in full. Then the next quarter’s GST and PAYG arrive on top. Add an income tax assessment, and a manageable shortfall becomes a serious balance, with interest compounding on it daily.

None of that makes the business unviable. But the longer a tax debt runs, the fewer options there are and the more it costs.

Why the 1 July 2025 change matters

Until recently, general interest charge (GIC) and shortfall interest charge (SIC) on tax debts were tax deductible, which softened their real cost. For income years starting on or after 1 July 2025, the ATO says these charges can no longer be claimed as a deduction. That makes carrying a long-running ATO debt more expensive than it used to be, and makes it worth comparing a payment plan with refinancing the debt.

Your options, side by side

Option	How it works	Things to weigh
ATO payment plan	Pay the ATO in instalments	Often available online for debts of $200,000 or less; GIC keeps accruing
Unsecured loan	Clear the debt with a cash flow loan	Typically $5,000–$500,000; sized on turnover
Property-secured loan	Clear larger debts using property	$20,000–$5,000,000 range; tax debts considered case by case
Consolidation	Roll tax and other debts into one	See business debt consolidation

For smaller debts in a business that trades well, a cash flow loan can be simplest. For larger debts, or where the ATO has started firmer action, a second mortgage or caveat loan is common.

What the ATO can do if a debt isn’t dealt with

The ATO’s firmer actions can include garnishee notices (directing a third party, such as your bank or a customer, to pay the ATO), director penalty notices that can make directors personally liable for certain unpaid amounts like PAYG withholding and super guarantee charge, and, for some businesses, reporting tax debts to credit reporting bureaus. The ATO pages linked below set out exactly when each applies.

How to get the best outcome

1. Keep lodging. Lodge every BAS and return on time, even if you can’t pay.
2. Get the real balance. Download your current statement of account from ATO online services.
3. Talk to your accountant about whether the debt is accurate and what’s coming next.
4. Compare options in dollars. Payment plan versus loan, over the realistic timeframe.
5. Act before enforcement. Options narrow once garnishees or director penalty notices are issued.

When you’ve got the balance and a sense of your preferred path, enquire here and a specialist will talk through which shelf suits.

An illustrative example

A transport company has fallen two quarters behind on BAS after a major customer collapsed. The owner owns a home with good equity. A second mortgage clears the full ATO balance, stopping further GIC, and is repaid over a planned term from trading income. (Illustrative only.)

What else is ATO debt loans called?

Lenders, accountants and search engines don’t all use the same words. You’ll also see this entry described as Tax debt loan, BAS loan and Tax bill finance. In our A–Z index every one of those names points back to this page, so whichever term you searched, you’ve landed on the same thing. If a lender uses a name you don’t recognise, ask them to describe how the security, the term and the repayments work; that tells you far more than the label.

Where does it sit in the directory?

This entry lives on the cash flow and unsecured shelf. It’s most often used for tax bills and debts, and the security usually involved is whatever suits the deal, from nothing at all to property. It is one of the quicker entries to put in place when the paperwork is ready. Its closest neighbours are:

• Cash flow loans — Sized on turnover and bank statements to smooth out the gap between bills and income.
• Short-term business loans — Borrow for weeks or months to cover a specific, time-limited need.
• Payroll and wages funding — Keep wages and super flowing when a big customer pays late.
• Bad credit business loans — Past defaults or a declined bank application don’t automatically end the conversation.

To compare all of them at once, filter the Loan Finder by purpose and security.

Common mistakes to avoid

• Starting with the product instead of the purpose. Decide exactly what the money must achieve, then choose the structure that fits it.
• Not comparing secured and unsecured options. The same need can often be met either way; the right answer depends on amount, credit and timing.
• Under-estimating the total cost. Ask for the full amount repayable in dollars, including every fee, before you compare offers.
• Applying everywhere at once. Multiple applications can leave a trail of credit enquiries. One well-prepared enquiry is better.
• Leaving it until the last minute. Facilities are easier to arrange while trading is strong, not in the middle of a crunch.

What should I ask before signing up for ATO debt loans?

A short list of questions saves a lot of regret. Put these to any lender or specialist before you commit:

1. Which structures did you consider for me? A good specialist explains why one option beats the others for your situation.
2. What’s the total cost in dollars? Compare like with like across secured and unsecured offers.
3. What security or guarantees are needed? Know exactly what’s on the line before you sign.
4. How are repayments timed? Match frequency to how money comes into your business.
5. What happens if things change? Ask about early repayment, top-ups and hardship options.

If an answer is vague, ask again or ask for it in writing. Good lenders are happy to explain their terms clearly.

Clear the tax debt and move on

If a tax debt is weighing on your business, the first step is a short, honest enquiry. No credit check is involved at that stage, and your details are handled by one specialist, not handed around to every lender who’ll take them.

Please tell us the current ATO balance, what it’s made up of and whether you own property. Accurate figures mean we can show you the right option on the first call. Start your enquiry.