Tax debt loans are business funding used to pay an overdue ATO balance in one go, so the interest stops building and the ATO has nothing left to chase. The money can be secured on property or unsecured, or you can skip new borrowing and negotiate an ATO payment plan. This page is the map: three routes, who each one suits, and where to go next.
What are tax debt loans and how do they work?
A tax debt loan is an ordinary business loan with one specific job: its proceeds are paid to the ATO. You borrow, the debt is cleared, and from then on you owe one lender on agreed terms instead of the ATO on its terms.
Two things make that trade worth considering. Overdue amounts attract general interest charge (GIC), which compounds daily and is reviewed quarterly. And for charges incurred from 1 July 2025, neither GIC nor shortfall interest charge can be claimed as a deduction. You can check the current GIC rate on the ATO’s rates page; we do not quote it here because it changes.
For the mechanics of the loan itself, see loans for tax debt.
What are the three ways to deal with a tax debt?
You can borrow against property, borrow without property, or arrange to pay the ATO over time. Each fits a different business.
| Route | Security | Typical size | Best when | Main catch |
|---|---|---|---|---|
| Property-secured loan (first or second mortgage, caveat) | Property you or a director own | Commonly $20,000 to $5,000,000 | The debt is large, the deadline is close, or credit history is rough | Costs more than a bank loan; needs real equity and an exit |
| Unsecured business loan | None | Commonly $5,000 to $500,000 | You trade steadily, own no property, and the debt is modest against turnover | Needs bank statements; limits follow turnover |
| ATO payment plan | None, unless the ATO asks | Set by what you owe | You can afford regular instalments and are up to date | Interest keeps compounding while you pay |
Most owners know in a minute which row describes them. If you do not, the section below sorts it out.
Which route suits your business?
Choose by the size of the debt, the property you hold and how much time you have.
- You own property and the debt is large or urgent. A private mortgage clears the ATO in one payment, and funding can be possible within 24 hours in some approved scenarios when documents and exit are ready. See second mortgage business loans and caveat loans.
- You have no property but trade well. An unsecured loan is sized on turnover and bank statements. Read unsecured business loans for how limits are set.
- Your credit is damaged. Defaults, judgments and past ATO debt can be considered, particularly where security is offered. Start with bad credit business loans.
- The debt is small and cash flow is steady. A payment plan may be all you need. The ATO says debts of $200,000 or less may be set up through its online or phone services; larger debts need a call.
If you are weighing a plan against a loan, our payment plan versus loan guide puts the cost side by side.
What happens if you leave an ATO debt unpaid?
The ATO can escalate beyond interest. Its published firmer actions include garnishee notices (taking money from third parties who owe you), director penalty notices, and reporting overdue business tax debts to credit bureaus.
Credit reporting has a published trigger. The business holds an ABN, at least $100,000 has been overdue for over 90 days, and the owner is not engaging with the ATO. Written notice comes first, with 28 days to respond. A payment plan you keep to counts as engaging, so doing something early beats waiting for the notice.
Where the debt is PAYG withholding, GST or super and the business is a company, directors can be personally exposed. That is covered in director penalty notice loans.
Can you get a tax debt loan with bad credit?
Yes, bad credit can be considered, because security-led lending leans on the property and the exit more than on the credit file. A past ATO debt, a bank decline or a default does not rule out a private mortgage. It usually means we need to see more equity and a clear plan for repayment.
Unsecured lenders are less flexible. They read bank statements for consistent deposits and will often decline where the account shows recent dishonours or heavy arrears.
What do lenders look at before approving?
Lenders look at three things: the size of the debt against the security or turnover, the proof of what you owe, and how the loan gets repaid.
- The ATO balance. A recent statement from your online services account, showing what is overdue.
- The security or the turnover. Property details for a secured loan; recent bank statements for an unsecured one.
- The exit. A refund, a receivable, a sale, a refinance, or a trading recovery with something concrete behind it.
Private mortgage options may not need business cash-flow records at the initial assessment. Unsecured loans generally do.
Illustrative example: a loan before the 90-day line
Illustrative example: a plumbing business owes the ATO $140,000 in overdue BAS amounts. The balance has been overdue for 80 days, and the owner has not set up a plan. The director owns a home with a first mortgage and good equity. A private second mortgage of $150,000 is arranged, $140,000 goes to the ATO, and the remainder covers fees and a month of interest. The debt never reaches the 90-day credit-reporting point. Twelve months later the business refinances the loan with a bank once its lodgments are current.
The numbers are round and the business is invented. The pattern is real: clear the debt before enforcement or reporting starts, then refinance when the file looks tidier.
How do you apply for a tax debt loan?
You apply once and we match you to the route that fits. Here is the order of play.
- Get your exact ATO balance and note which parts are overdue.
- Lodge anything outstanding. Funds go to the ATO most smoothly when the account is up to date.
- Collect ID, the security property address, recent statements and an ATO account summary.
- Submit the quick application and say how the loan will be repaid.
- Receive an indicative answer, sign, and have the ATO paid directly.
Funding can move fast, but we never promise a timeline. Fast private money costs more than a bank loan, so it suits cases where clearing the debt now is worth more than the extra cost.
Wondering whether this is the right time? Check your options with one application and we will tell you whether a loan, a plan or a mix makes sense.
Who should not take a tax debt loan?
Skip the loan if the debt is small enough to clear from cash within a few months, or if you cannot say how a lender would be repaid. A loan on top of an unsolved cash-flow problem only moves the problem to a new creditor.
It is also the wrong tool if the underlying shortfall repeats every quarter. In that case fix the cycle first: set GST and withholding aside weekly, and talk to your tax agent about your instalments. Where a loan does make sense, it should be the end of the problem, not the start of the next one. We will say so plainly if your file looks like the first kind.
Is there anything to do before the ATO escalates?
Yes, three things: lodge, talk and size the problem. Lodge any overdue BAS or returns, because the ATO’s own guidance says to contact it as early as possible. Ask your tax agent for the payout figure. Then work out how quickly you can realistically repay.
If the debt arose from missed GST, withholding or super, our guide to a loan to pay BAS, GST and PAYG debt explains each obligation and how to clear it.
Start with one application
The quickest way to find the right route is to put the facts in front of someone who handles ATO-debt files every week. The application takes a few minutes: the amount, the property if any, what is overdue and how the loan gets repaid. Start your application or call 03 4059 1829 and we will help match you with a path that fits.