ATO debt options for small business

An ATO debt is one of the most stressful things a business owner can carry. The letters get firmer, the interest keeps accruing and the fear of what comes next makes it hard to think straight. The good news is that there are several ways forward, and most of them get easier the earlier you act.

Step 1: get lodgements up to date

Before anything else, lodge every outstanding BAS and tax return. The ATO cannot work with numbers it does not have, lenders want to see lodgements current, and failing to lodge adds penalties. Your accountant can help if you are behind.

Step 2: understand the debt

Get a current statement of account from the ATO or your accountant showing:

• The total owed and what it is for (GST, PAYG withholding, income tax, super guarantee charge).
• How much is general interest charge.
• Any payment plans in place.
• Any notices issued, such as a director penalty notice.

The main options

Option	Suits	Watch out for
Pay from cash	Small debts with healthy cash flow	Leaving no buffer
ATO payment plan	Manageable debts cleared over a reasonable period	GIC keeps accruing; new tax must be paid on time
Remission request	Where penalties or interest arose in particular circumstances	Not guaranteed; get advice
Unsecured funding	Moderate debts for trading businesses	Repayments on top of new tax
Property-secured funding	Larger or older debts	Property at risk if not repaid

Quick sense check? Tell us the amount and the purpose. A person will call with an honest read, and your credit file stays exactly as it is.

Payment plans

The ATO offers payment plans, and debts of $200,000 or less can usually be set up online. You will need to keep up with plan instalments and pay new tax as it falls due. The general interest charge continues on the outstanding balance, and for GIC incurred from 1 July 2025 it is no longer tax deductible.

Funding

When the debt is large, old or attracting firmer action, clearing it with funding can be the better route. Funds can often be paid straight to the ATO at settlement. ATO debt loans explains unsecured and property-secured options, and our payment plan vs loan comparison shows how to choose.

When action escalates

The ATO’s firmer options include garnishee notices, director penalty notices and reporting larger overdue business debts to credit bureaus. If you receive any of these, speak to your accountant immediately. Our guide to director penalty notices and our page on ATO debt notices explain more.

Stopping it happening again

• Set aside GST and PAYG every week in a separate account.
• Keep bookkeeping current.
• Forecast each BAS a month ahead.
• Treat super like wages: due with each pay run from 1 July 2026.

Our guide to BAS quarter cash planning sets out a routine.

Related reading

• ATO debt loans: ATO debt loans clear a business tax debt so it stops growing with interest. When a loan beats a payment plan, and how unsecured and secured options compare.
• ATO payment plan vs business loan: ATO payment plan vs business loan to clear a tax debt: costs, interest charges, approval, cash flow impact and when each option makes more sense.
• Received an ATO debt notice: Received an ATO debt notice, garnishee or director penalty notice? What to do first, how payment plans and funding compare, and why timing matters.
• Director penalty notices explained: What a director penalty notice is, the difference between lockdown and non-lockdown notices, the timeframes involved and why you need advice quickly.
• GIC is no longer tax deductible: what it means: From 1 July 2025, the ATO’s general interest charge is no longer tax deductible. What that does to the real cost of carrying a tax debt and your options.

A quick glossary

• BAS: the business activity statement used to report and pay GST, PAYG withholding and other amounts to the ATO.
• General interest charge: the ATO’s interest on overdue tax, set quarterly and compounding daily; not deductible when incurred from 1 July 2025.
• PAYG withholding: tax withheld from wages and other payments, which the business passes on to the ATO.
• Personal guarantee: a promise by a director or owner to repay a business debt if the business does not.

Before you accept an offer

• What is the full cost of this finance in dollars over the whole term?
• Can I repay early, and will that cost extra?
• Is there a fee on the unused part of the limit?
• Who needs to sign or guarantee the loan?
• What exactly triggers a default under the contract?

Who else to talk to

A good accountant can save you from borrowing too much, too little or in the wrong structure. Share the quote, the purpose and your forecast with them. If they spot something, such as an upcoming tax bill or a better way to structure an asset purchase, it is much easier to adjust before the documents are signed.

In a nutshell

• Lodge everything outstanding first
• Payment plans suit manageable debts; online for $200,000 or less
• Funding suits larger debts or escalating action
• GIC incurred from 1 July 2025 is not tax deductible

How we work through it with you

The process is built to avoid wasted time. The enquiry asks only what matters. The first call gathers what is missing. Statements are shared securely online, documents are signed electronically and any property security is prepared in parallel. Straightforward files can be approved within the hour, and funds can land within 24 hours once everything is signed. More complex files take a little longer, and you will be told why. Where a step is waiting on someone else, such as a co-owner’s signature, we will tell you so it can be chased.

Is funding the right answer here?

Not every cash problem is a funding problem. Sometimes the better fix is a conversation with a supplier, a payment plan with the ATO, chasing an overdue invoice or adjusting prices. Funding earns its place when it solves a timing gap or unlocks an opportunity worth more than its cost. We will tell you honestly which situation you are in.

Getting your details together

Have these within reach and the process moves quickly, because each one answers a question the assessor would otherwise have to come back and ask:

• ABN, business structure and how long you have traded.
• Recent business bank statements, ideally shared online.
• What the money is for and how it will be repaid.
• Any tax debt, default or arrears you should mention up front.
• Contact details for anyone else who would need to sign.

About the questions we ask

Every question on the form is there for a reason: it changes which funding fits. Describe the business as it stands today rather than the version you expect in six months. Mention any default, tax debt or recent decline in the notes. We look at those situations all the time, and knowing early lets us head straight for options that can actually work.

Get a straight answer

Ready when you are. Send your enquiry and a real person will review it and call you back. There is no credit check to enquire and no selling of your details. The only thing we ask is accuracy: tell us what you really need, what the business really turns over and how your credit really looks, so the first match is the right match.