ATO debt
The ATO plan is crushing your cash flow. There's another way.
ATO payment plans are often one to two years. That means big repayments every month while the ATO's interest keeps building. Since 1 July 2025, that interest isn't tax deductible either. We check the ATO's own options first. Then we look at moving the debt into a business loan over 3 to 5 years, so the repayments fit. Interest on the new loan may be tax deductible. Your accountant confirms.
OzCap Finance is a Sunshine Coast business finance broker, working with lenders Australia-wide. Prefer we call you? Leave your number.
Your options
Three options, side by side.
We show you the total cost of all three before you decide.
The ATO's interest-free plan
If you qualify. Up to 12 months, by direct debit.
A standard ATO plan
Interest keeps building. Repayments are usually heavy.
A longer business facility
Over 3 to 5 years. Lower repayments, more interest overall.
The problem
Why the ATO plan hurts.
Interest that keeps building
The general interest charge (GIC) changes every quarter. On a standard plan it keeps building and compounds daily. Run your numbers to see where it sits today.
None of it tax deductible
From 1 July 2025, GIC and shortfall interest charge aren't deductible, even where the debt is from an earlier year. It's the ATO's rule.
Heavy monthly repayments
Squeeze an $85,000 debt into 24 months and it's about $3,979 a month, before your other bills. See the comparison further down.
Got your ATO statement? Send us the number.
One call and we'll walk you through your options.
Do this first
Check what the ATO can offer you.
The ATO has interest-free payment plans for some small businesses. It still charges interest (GIC), but generally removes it while you keep to the plan. If you qualify, it can be the cheapest option.
If you don't qualify, the debt is bigger, or 12 months is too tight for your cash flow, that's where a restructure can help.
Eligibility is the ATO's call. Check the ATO's alternative payment plans page or ask your accountant.
You may qualify if
The ATO sets these criteria and can change them, so check ato.gov.au before you rely on them. At the time of writing they include:
- Turnover is under $2 million. It's aimed at small businesses.
- You owe $50,000 or less from an activity statement (your BAS) that's been overdue up to 12 months.
- Your returns and BAS are lodged. No outstanding activity statements.
- You can repay within 12 months by direct debit.
What happens if it drags on
The ATO can escalate.
Credit reporting
If $100,000 or more is overdue by more than 90 days, the ATO can report it to credit reporting bureaus. They write to you first and give you 28 days to act. A payment plan you stick to stops it.
Director penalty notices
If a company hasn't paid PAYG withholding, GST or super, directors can become personally liable. You usually get 21 days from the notice to act. Talk to your accountant or an insolvency practitioner straight away. We can't give insolvency advice.
Security
For some payment plans, the ATO can ask for security before it agrees. Ask your accountant what that would mean for your business.
Two ways we do it
A longer facility means smaller repayments.
1. A business loan or line of credit
Secured or unsecured. Terms of 3 to 5 years, depending on the lender and the deal, so the repayments are lower. See business loans and lines of credit.
2. Equipment or fleet you own
A capital raise turns gear you own into cash to pay out the ATO, including a sale and leaseback if you own it outright.
Security means risk.
A longer facility means you pay more interest overall. If it's secured and you can't keep up the repayments, the lender can take the security. Lenders may also ask directors for a personal guarantee. We walk through the risks with you before anything is signed.
Same debt, two repayments
An $85,000 ATO debt, side by side.
| What is compared | Standard ATO plan | Restructure with a lender |
|---|---|---|
| Term | 24 months | 3 to 5 years (shown over 5) |
| Interest rate | The ATO's GIC rate for October to December 2026 (it changes every quarter) | An example 11%, before fees |
| Monthly repayment | About $3,982 | About $1,848 |
| Total interest | About $10,564 | About $25,886 |
| Tax treatment of interest | Not deductible | May be deductible. Your accountant confirms. |
The restructure frees up about $2,134 a month, mostly from the longer term. That is also why the total interest is higher.
Example only. Not an offer or advice. Actual rates, fees, terms and approval depend on the lender and your file. Run your own numbers.
How it works
Three steps.
Tell us what's going on
A quick call. We ask about the debt, the plan and the business.
We map your options
You see the ATO's options, repayments, total interest and trade-offs side by side.
We take it to the right lenders
We match your deal to a lender, manage the paperwork and keep you updated to settlement.
Who it suits
- You owe the ATO and the current plan is squeezing your cash flow.
- You're still trading and can show money coming in.
- You've been told no by your bank, or you haven't bothered asking.
When it's not the answer
- You can't meet any repayment at all. Talk to your accountant about the ATO and your options first. We'll tell you straight if a restructure won't work.
- You've received a director penalty notice and can't pay. Get insolvency advice first. Time limits are short.
- The business isn't earning. A longer loan on a business that isn't viable only delays the problem.
What to bring
- Your ATO account statement and payment plan details
- Your latest BAS and last two years' returns or financials, if you have them
- A list of assets: equipment and vehicles
- ID for the directors
- What the bank said. A screenshot of the email is fine.
Messy books? Bring what you have. That's what we're here for.
A longer loan costs more overall.
Lower repayments come from spreading the debt over more years, so you pay more interest in total. It's a cash flow tool. We show you both numbers so you can decide.
Lenders have their own tests.
Most want your returns and BAS lodged, and many want security. We'll tell you early what your file needs. See our ATO debt finance guide.
Questions people ask
Should I just take the ATO's interest-free plan?
If you qualify, usually yes. It's typically the cheapest option. It's for small businesses with turnover under $2 million and recent activity statement debt of $50,000 or less that's been overdue up to 12 months. If you don't qualify, or 12 months is too tight, ask us about a restructure.
Is the interest on the new loan tax deductible?
It can be. If the loan pays out a business tax debt and the business is the borrower, the interest may be deductible. Deductibility depends on how the loan is used and who borrows. The ATO's own interest isn't deductible from 1 July 2025. Your accountant confirms yours, and we give them the numbers up front.
Can I restructure if I'm already on an ATO payment plan?
Often, yes. Bring the plan details and we'll tell you what's possible.
What if I'm behind on other tax, like BAS or super?
Tell us straight up, because it changes the options. Unpaid PAYG withholding, GST and super can also put directors on the hook personally. See Payday Super for how super works now.
Tell us what happened.
Call, text or send an enquiry. Straight answers.