Tax debt business loans, in three clear steps

Why do business tax debts build up?

Rarely through carelessness. More often it’s timing. GST collected from customers sits in the business account and quietly funds wages. PAYG withheld from staff pays a supplier. A slow quarter arrives just as the BAS falls due. Before long, one quarter’s shortfall becomes two.

The good news is that a tax debt is a solvable problem. The key is to act early, because the options narrow and the costs grow the longer it sits.

What’s changed that makes acting sooner more important?

Three things the ATO has made clear:

1. Interest is no longer deductible. The ATO says you can no longer claim a tax deduction for general interest charge incurred in income years starting on or after 1 July 2025. GIC also compounds daily, so carrying a tax debt now costs more in real terms than it once did.
2. Credit reporting. The ATO is able to report a business’s tax debt to the credit bureaus if, among other tests, the business holds an ABN, $100,000 or more of its tax has sat unpaid for over 90 days and nobody is working with the ATO on a plan.
3. Director penalties. Under the director penalty regime, directors can end up personally responsible for unpaid company PAYG withholding, GST and super guarantee charge. The ATO says directors have 21 days from when a notice is posted or left at their ASIC-registered address to take one of the options it sets out.

Step one: what exactly do you owe?

Log in to ATO online services, or ask your accountant, and list every debt:

Debt type	Why it matters
GST from BAS	Can be covered by a director penalty
PAYG withholding	Can be covered by a director penalty
Super guarantee charge	Can be covered by a director penalty, with extra charges
Income tax	Accrues GIC like other debts

Note any notices you’ve received and their dates. Deadlines change which options are realistic.

Step two: payment plan or loan?

Start with the ATO’s own option. Businesses that owe $200,000 or less can often set up a payment plan online. A plan you can genuinely keep up with is a legitimate solution, and being on a compliant plan counts as engaging with the ATO.

A loan can make more sense when:

• The debt is larger than a plan can comfortably absorb
• A plan has already failed or the instalments the ATO wants are too high
• A deadline is running, such as a director penalty notice
• You want one structured repayment instead of several debts accruing GIC

Which loan? Smaller debts for trading businesses may suit unsecured lending, typically $5,000 to $500,000 sized on turnover. Larger debts, or situations with credit marks, often suit property-secured options from $20,000 to $5,000,000: a second mortgage or a caveat loan for a short, sharp clean-up.

Want help comparing? Start a 60-second enquiry. ATO debt is considered case by case, and enquiring involves no credit check.

Step three: clear it and stay clear

Paying the debt is half the job. Making sure it doesn’t come back is the other half.

• Separate the tax money. Business.gov.au suggests putting money aside in a separate account to pay what you owe on time, including tax and employee costs.
• Know your dates. Quarterly BAS is generally due 28 October, 28 February, 28 April and 28 July; monthly lodgers have until the 21st of the next month. Our BAS time cash flow page has a simple planner.
• Lodge on time even if you can’t pay. Lodging keeps the ATO informed and keeps your options open.

Illustrative example only. A company running two retail stores owes the ATO for three quarters of BAS plus PAYG withholding. The director has received a director penalty notice. Her accountant lists the debts and confirms the deadline. A property-secured loan over her home clears the debt in full, and the business starts transferring a fixed percentage of weekly takings into a separate tax account from the next week.

For a fuller walk-through, read our guide to handling ATO debt three ways.

What if I can’t afford the payment plan or the loan?

Sometimes neither option fits, because the underlying business can’t support the repayments. That’s an important signal, and it’s better to face it early.

Business.gov.au’s financial trouble hub points to resources on warning signs, managing debt and reviewing your financial health. Your accountant can help you work out whether the tax debt is a timing problem or a sign that costs, pricing or the business model need to change.

If it’s a timing problem, finance can help. If it’s a deeper problem, borrowing can make things worse, and getting professional advice about your options is the right next step. A responsible specialist will tell you honestly which side of that line you’re on, rather than pushing a loan that won’t fit.

Let’s get the ATO sorted

Tax debts feel heavy, but they’re one of the most common reasons business owners talk to us, and there’s usually a sensible way through.

When you enquire, there’s no credit check. A real person reads your situation and calls you; we don’t scatter your details to every lender we know. Please be honest and accurate on the form, especially the size of the debt, any notices you’ve received and whether you own property, so we can focus on the option that fits from the very first call. Ask about clearing your tax debt.