Refinance ATO debt: rolling tax and business debts into one facility

Why are more businesses refinancing ATO debt?

For a long time, many business owners treated the ATO as a cheap, flexible lender. Set up a payment plan, claim the interest as a deduction, move on. Two things have changed that picture.

First, GIC incurred on or after 1 July 2025 is no longer deductible — even where the debt relates to an earlier year. The interest is the same; the after-tax cost is higher. Second, the ATO’s collection activity has become firmer, with more director penalty notices, garnishee notices and credit-reporting disclosures being issued to small businesses that haven’t engaged. The ANAO’s 2025–26 audit noted that small business collectable debt made up the majority of all collectable tax debt, which explains the attention.

Neither change makes refinancing right for everyone. They do make it worth comparing properly.

How does consolidation work?

Consolidation pays out several debts with one facility. A typical (illustrative) picture:

Before	After
ATO activity statement debt on a plan	Paid out at settlement
ATO income tax debt, no plan	Paid out at settlement
Short-term business loan with daily repayments	Paid out at settlement
Overdue supplier accounts	Paid out or brought current
Five due dates, five creditors	One lender, one repayment, one term

Where it’s arranged, the ATO amounts are paid straight to the ATO, and the other creditors are paid from settlement too. The business is left with a single facility and, ideally, room to pay the next BAS on time.

Property-secured facilities run from $20,000 to $5,000,000 and suit consolidation best, because they can carry larger balances over longer terms. Unsecured facilities, typically $5,000 to $500,000, can consolidate smaller debts for trading businesses with steady deposits.

How should you think about the cost without a rate?

We don’t publish interest rates — every loan is priced on the individual situation — and we’d encourage you to ignore anyone’s “from” rate anyway. What matters is total cost over the time you’ll actually have the loan. A sensible comparison looks at:

1. The ATO side. The balance, the plan term you’d realistically need, and GIC compounding daily at the ATO’s current quarterly rate (published on ato.gov.au). Remember that GIC from 1 July 2025 isn’t deductible.
2. The loan side. The total of all repayments and fees over the loan term, from a real written quote. Interest on a business loan may be deductible — your accountant can confirm.
3. The risk side. What happens on each path if a payment is missed. A defaulted ATO plan makes the whole balance due at once and can lead to firmer action; a loan has its own terms, which you should read.

Our payment plan vs loan tool does the arithmetic for you using the numbers you enter. It doesn’t fill in any rate for you.

When does refinancing make sense — and when doesn’t it?

It tends to make sense when:

• the business is profitable or close to it, but its debts are badly timed;
• several short-term debts are squeezing cash flow with frequent repayments;
• there’s a director penalty exposure that payment would remove;
• the ATO has defaulted a plan or refused a new one.

It tends not to make sense when the business is losing money month after month, or when the debts are well beyond what the business could ever repay. In those cases, borrowing moves the debt rather than solving it. Our honest decision guide, restructure or refinance, helps you tell the difference.

What does a lender need for a consolidation?

• A current ATO statement of account and lodgement status.
• Statements for each debt to be paid out, with payout figures.
• Recent business bank statements and, for larger amounts, financial statements.
• Property details if the facility is secured.
• A short explanation of how the debts arose and what’s changed.

How do you make sure the debt doesn’t come back?

Consolidation works best with a few habits in place afterwards: a separate account for GST and PAYG withholding, super paid with each pay run under Payday Super, and a mid-quarter check with your bookkeeper. The goal is a business that never needs to consolidate again.

What should be in your written quote?

When you compare refinancing with staying on an ATO plan, insist on a quote that shows the full picture: the amount financed, the term, every fee (establishment, legal, valuation, discharge), the repayment amount and frequency, the total of all repayments, and what happens if a repayment is missed or the loan is repaid early. If any of these is missing, ask for it before deciding.

Who should be involved

Bring your accountant into a consolidation early. They can confirm the ATO balances by account, advise which debts to clear first, check how interest will be treated for tax, and help you build the cash-flow forecast a lender will want to see. A well-prepared refinance is faster to approve and far less likely to leave gaps — such as a forgotten ATO account or a supplier who wasn’t on the list.

Ready to simplify things?

If you’re juggling the ATO and other business debts and want a single, plannable repayment, tell us about it here. There’s no credit check to enquire, your details aren’t scattered across lenders, and a real person will look at the whole picture with you. List each debt accurately — the ATO balance, other loans and anything overdue — so the first conversation can be about real options, not guesses.