Why business owners refinance tax debt
An ATO payment plan spreads the debt out, but interest keeps running. The general interest charge (GIC) is set quarterly, sits at around 11% a year and compounds daily. GIC incurred from 1 July 2025 can no longer be claimed as a tax deduction (ATO).
Collection activity is also lifting. Small businesses owed $35.9 billion of the ATO's $54.2 billion in collectable debt at 30 June 2025, and the Auditor-General expects it to stay above the ATO's tolerance for another year or two. Clearing the debt with finance gives you one repayment you can plan for and stops the ATO's recovery steps from escalating.
Your options
| Option | Usually suits | Things to know |
|---|---|---|
| ATO payment plan | Smaller debts you can clear within a year or two | GIC keeps accruing. New lodgements and payments must stay on time or the plan can be cancelled. |
| Unsecured business loan | Debts up to about one or two months of turnover, with steady trading | Fast, no property needed. Costs more than secured lending. |
| Property-backed loan | Larger debts, tighter credit, or when the ATO has started firmer action | Private lenders focus on the property and the exit plan. Caveat loans can settle within days. |
| Line of credit | Businesses that keep getting caught by quarterly BAS | Draw what you need each quarter and repay as cash comes in. |
| Compromise of the debt | Rare cases of genuine inability to pay | The ATO can accept less than the full amount in limited circumstances. Talk to your accountant. |
Comparing the cost
On a $100,000 debt, GIC at about 11% compounding daily adds roughly $11,600 over a year, and none of it is deductible. A business loan at 14% simple interest costs $14,000 over the same year. For a company paying the 25% tax rate, deductible loan interest has an after-tax cost of about $10,500.
Loan fees change that comparison, and so does your tax position. Your broker will give you the total cost of each option, and your accountant can confirm the tax treatment. The full working is in our article on the GIC deductibility change.
Example only. Rates and tax treatment depend on your circumstances.
What lenders want to see
- Lodgements up to date. Many lenders won't fund until BAS and tax returns are lodged, even if they're unpaid.
- A current ATO statement showing the balance and any payment plan.
- Recent business bank statements to show the business can carry the new repayment.
- Property details for a secured loan: address, estimated value and current loan balance.
- A short explanation of how the debt built up and what has changed since.
If the ATO has already taken action
A garnishee notice lets the ATO collect money owed to you directly from your bank or customers. A director penalty notice can make directors personally liable for some company tax debts, with a 21-day window that starts from the date the ATO issues it. Both call for quick advice from your accountant. Finance may be one of the options they discuss, and property-backed lenders can sometimes move within that window.
Read more: ATO garnishee notices and director penalty notices.
How it works
- Answer the quiz and tell us roughly what you owe.
- A broker calls to understand the debt, your trading and any property.
- Your broker shortlists lenders and shows you the cost of each option next to staying on the payment plan.
- Once approved, the lender pays the ATO directly in most cases, and you repay the lender.
FundFox arranges finance. We don't negotiate with the ATO, reduce tax debts or give tax advice.