ATO debt business loans
By Shaun Johnson · Updated 25 October 2026
Pay off or refinance your business's tax debt with a business loan, and know when an ATO payment plan is the better option.
- Non-bank and private lenders
- No obligation
- No cost to you
In a nutshell
An ATO debt business loan pays out your tax debt in full, so the ATO is paid and you repay a lender instead. It can stop ATO recovery action, director penalty risk and credit reporting, and the interest is generally tax-deductible, unlike the ATO's general interest charge (GIC). But GIC is 11.51% p.a. for October to December 2026, and some business loans cost more, so compare the after-tax cost before you refinance.
Why ATO debt has become harder to carry
- GIC is no longer tax-deductible. General interest charge incurred on or after 1 July 2025 can't be claimed, so you pay it with after-tax dollars. It compounds daily and is 11.51% p.a. for October to December 2026.
- Directors can become personally liable. The ATO can issue Director Penalty Notices for some unpaid company tax debts, such as PAYG withholding, GST and superannuation guarantee charge.
- Large debts can hit your credit file. The ATO can report business tax debts of $100,000 or more that are more than 90 days overdue to credit reporting bureaus, after giving 28 days' written notice.
- Credit card payments are ending. You won't be able to pay the ATO by credit card after 30 June 2027.
ATO payment plan or business loan?
How much
- ATO payment plan
- Up to $200,000 can usually be set up online; larger debts need the ATO's approval
- Business loan
- Depends on the lender, your revenue and any security you offer
Term
- ATO payment plan
- Generally up to 2 years
- Business loan
- Months to several years, depending on the loan
Interest
- ATO payment plan
- GIC at 11.51% p.a. (October to December 2026), compounding daily and not tax-deductible
- Business loan
- Varies by lender and business; generally tax-deductible when used for business purposes
ATO action
- ATO payment plan
- Missed instalments can lead to default, cancellation and recovery action
- Business loan
- The ATO debt is paid in full, so ATO recovery action ends
Credit reporting
- ATO payment plan
- Generally avoided while you keep up with the plan
- Business loan
- No ATO debt left to report; you repay the lender instead
Effect on other finance
- ATO payment plan
- ATO debt on your account can make banks and some lenders say no
- Business loan
- A cleared ATO account can make future finance easier
| ATO payment plan | Business loan | |
|---|---|---|
| How much | Up to $200,000 can usually be set up online; larger debts need the ATO's approval | Depends on the lender, your revenue and any security you offer |
| Term | Generally up to 2 years | Months to several years, depending on the loan |
| Interest | GIC at 11.51% p.a. (October to December 2026), compounding daily and not tax-deductible | Varies by lender and business; generally tax-deductible when used for business purposes |
| ATO action | Missed instalments can lead to default, cancellation and recovery action | The ATO debt is paid in full, so ATO recovery action ends |
| Credit reporting | Generally avoided while you keep up with the plan | No ATO debt left to report; you repay the lender instead |
| Effect on other finance | ATO debt on your account can make banks and some lenders say no | A cleared ATO account can make future finance easier |
Refinancing usually makes sense when
- the ATO has started recovery action or issued a Director Penalty Notice
- you owe more than $200,000 or need longer than 2 years to repay
- you've defaulted on a payment plan, or the ATO won't agree to one
- the debt is stopping you getting other finance
- the loan's after-tax cost is lower than GIC
A payment plan may be cheaper when
- the debt is small enough to set up online and repay within 2 years
- you can comfortably keep up with every instalment
- the only loans available cost more than GIC after tax
- there's no ATO action and no other finance you need
What GIC really costs
On a $100,000 ATO debt repaid over 12 months, GIC at 11.51% p.a. adds roughly $6,400. Over 24 months it's roughly $12,500. Because GIC isn't deductible, a company paying 25% tax would need a tax-deductible loan at around 15.35% p.a. to break even.
These figures assume the rate stays the same and every instalment is paid on time. Our ATO payment plan guide explains the numbers, and the business loan repayment calculator shows what a loan would cost.
Finance options for paying ATO debt
Unsecured business loan
For smaller ATO debts when you don't want to offer property. Fast, but many unsecured lenders want the debt on a payment plan that's up to date, and some won't lend if the ATO has started enforcement action.
Business loans →Property-secured loan
First or second mortgage and caveat loans from private lenders suit larger debts, or cases where ATO action has already started. They can often settle within days.
Private business lenders →Line of credit or overdraft
Helps manage ongoing BAS, GST and PAYG payments so new ATO debt doesn't build up again.
Lines of credit →Debt consolidation
If you also have other business loans, advances or cards, one consolidation loan can pay out the ATO and the rest, leaving a single repayment.
Business debt consolidation →Small Business Restructuring funding
Businesses in a formal Small Business Restructuring (SBR) process can sometimes access specialist funding to support the restructuring plan.
Hermes Capital profile →Lenders treat ATO debt very differently. For example, OnDeck treats tax enforcement action as a material negative credit event, while Ventra Capital lists ATO debt among the purposes of its property-secured loans (lender details checked 23 October 2026). That's why matching your situation to the right lender matters.
When a first or second mortgage might be necessary
Unsecured loans can clear smaller ATO debts, but many unsecured lenders won't help once the debt is large, the ATO has started action, or your credit file has been affected. A loan secured by a first or second mortgage over residential or commercial property might be necessary when:
- the ATO debt is more than unsecured lenders will cover, usually above a few hundred thousand dollars
- the ATO has issued a director penalty notice or garnishee notice, or started wind-up action
- your credit file has been affected by reported tax debt or other defaults
- you need to clear the debt within days
A first mortgage makes the lender the only or first-ranking lender on the property. A second mortgage sits behind your existing home loan and uses the equity left over, so you don't need to refinance it. Most private lenders in Australia lend this way, usually over short terms with a clear exit such as a sale or refinance. See business loans secured by property, second mortgage business loans and caveat loans.
What lenders look at
Your situation
- the size of the ATO debt and how long it's been outstanding
- whether you have a payment plan and are keeping up with it
- whether your BAS and tax returns are lodged
- any Director Penalty Notice or ATO recovery action
- your trading history and revenue
- property or assets you can offer as security, for larger debts
Documents to have ready
- your ATO integrated client account statement
- your ATO payment plan statement, if you have one
- 6 to 12 months of business bank statements
- identification for each director
- details of any property or assets offered as security
How refinancing ATO debt works
- 1
Get your ATO statements
Download your integrated client account statement and, if you have one, your payment plan statement from ATO online services.
- 2
Talk to us
We'll look at the size of the debt, how long you've been trading, your revenue, any security and any ATO action so far.
- 3
Lender matching
We seek multiple lender options for you from our panel of 100+ non-bank, private and bank lenders.
- 4
Approval
The lender assesses your application. Many non-bank lenders decide within days, and some on the same day.
- 5
Settlement and payout
The loan funds pay out your ATO debt, and your ATO account shows the balance cleared.
Talk to us about your ATO debt
Non-bank and private lenders are often more flexible with ATO debt than banks. We work with a panel of 100+ non-bank, private and bank lenders and match you with the ones best suited to your situation.
- Non-bank and private lending specialists, plus banks where they suit
- Your own broker, backed by proprietary AI lender matching
- We seek multiple lender options for you
- One conversation, no obligation
- Business finance from $30,000
Prefer to talk now? Call 1800 177 240, Mon–Fri, 9am–6pm AEST/AEDT.
Not sure which lender type suits you? Compare bank and non-bank business loans.
Get your ATO debt options
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FAQs
ATO debt business loan questions
Yes. Many non-bank and private lenders will lend to pay out ATO debt, and some list it as a common loan purpose. Criteria vary a lot: some unsecured lenders want the debt on a payment plan that's up to date, some won't lend if the ATO has started enforcement action, and property-secured lenders are usually the most flexible.
Interest on a business loan used for business purposes, including paying business tax debts, is generally tax-deductible. The ATO's general interest charge (GIC) incurred on or after 1 July 2025 isn't deductible. Check your own situation with your accountant.
It depends on the loan's cost and your tax rate. GIC is 11.51% p.a. for October to December 2026 and isn't tax-deductible. For a company paying 25% tax, that's about the same as a deductible loan at around 15.35% p.a. A loan that costs less than that after tax saves money; one that costs more may still be worth it to stop ATO action or get a longer term.
Yes. Many lenders prefer that you already have a payment plan and are keeping up with it, because it shows the debt is being managed. Have your payment plan statement ready when you apply.
Possibly, but act quickly. A Director Penalty Notice can make directors personally liable for some unpaid company tax debts, such as PAYG withholding, GST and superannuation guarantee charge, and it has strict deadlines. Property-secured private lenders can often move fastest. Speak with your accountant or adviser straight away.
It can. The ATO can report business tax debts of $100,000 or more that are more than 90 days overdue to credit reporting bureaus, after giving 28 days' written notice. This generally doesn't happen while you're engaging with the ATO, for example by keeping up with a payment plan.
Some non-bank lenders decide on the same day and fund within a few days, and property-secured private lenders can often settle within days. Having your ATO statements, bank statements and ID ready speeds things up.
No. There's no cost to you for our service. We're paid by the lender when your loan settles, and there's no obligation to proceed.
This page is general information only and isn't tax or credit advice. ATO figures are from ato.gov.au, and the GIC rate changes each quarter. Speak with your accountant about your tax position. All lending is subject to each lender's credit criteria and assessment.