Paying an ATO debt or BAS bill without stalling the business

Growth has a habit of producing tax bills. A bumper quarter means a bigger BAS. A year of strong profit brings an income tax bill and higher PAYG instalments. Add a few months where cash went into a fit-out or new staff, and suddenly the ATO is owed more than the bank account holds. It’s one of the most common reasons small-business owners call us — and one of the most fixable.

First: talk to the ATO

Whatever you decide about finance, the worst option is silence. The ATO’s approach to a debt depends heavily on whether a business is engaging with it. Lodge your BAS and returns on time even if you can’t pay in full, and contact the ATO about your options.

Key dates to keep in view — quarterly BAS is due:

Quarter	Due date
July–September	28 October
October–December	28 February
January–March	28 April
April–June	28 July

If you lodge monthly instead, each statement and payment falls due on the 21st day after the month it covers.

Your three main options

1. An ATO payment plan. The ATO says that if you owe $200,000 or less, you may be able to set up a payment plan through its online services. You keep dealing directly with the ATO and repay over an agreed period. The ATO generally charges interest on overdue amounts, so check the total cost.

2. Pay from cash flow. If the bill is manageable and your next few months look strong, adjusting spending and paying it down quickly may be simplest.

3. Refinance with a business loan. A lender pays the ATO, and you repay the lender. Owners choose this when they want one predictable repayment, need to protect cash for operations, or want to resolve the debt quickly.

When does a loan make sense?

A loan to clear tax debt tends to work best when:

• Lodgements are up to date and the debt amount is confirmed
• The cause was one-off — a big quarter, a fit-out, an investment — not a business that consistently can’t cover tax
• The business can afford both the new repayments and its ongoing tax obligations
• Resolving it quickly matters — for example, before a large tender, a lease renewal or a business sale

Options include cash flow loans sized on bank statements for smaller amounts, and second mortgage business loans if you own property and the debt is larger.

Owe the ATO and want to know where you stand? Tell us the numbers — tax debt is considered case by case, and there’s no credit check just for enquiring.

Why the $100,000 / 90-day mark matters

The ATO can disclose business tax debts to credit reporting bureaus when certain conditions are met. Its published criteria include having an ABN, having at least $100,000 of tax debt overdue by more than 90 days, and not effectively engaging with the ATO to manage the debt. A disclosed tax debt can make it harder to get credit from suppliers and lenders — another reason to act before a debt reaches that point.

What lenders look at

• The ATO portal statement showing the debt and any plan in place
• Lodgement history — are BAS and returns up to date?
• Recent bank statements to see ongoing trading
• What caused the debt — a one-off, or a pattern?
• Any security — property opens up larger amounts and longer terms

Be upfront. A lender who discovers an undisclosed tax debt late in the process is far less likely to help than one told about it on the first call.

Illustrative example: A landscaping business has a record spring and summer, then spends heavily on a new excavator and trailer. The April BAS arrives larger than expected, with an earlier quarter still partly unpaid. Lodgements are current. The owner refinances the tax debt with a loan secured against his property, freeing cash flow for the quieter winter months and clearing the ATO in one step.

Stopping it happening again

• Set aside GST and PAYG withholding as you go, in a separate account.
• Forecast your BAS a quarter ahead — our cash flow forecasting page shows how.
• Budget super every payday — with Payday Super from 1 July 2026, it’s no longer a quarterly bill. See funding new hires.
• Review PAYG instalments with your accountant if your income has changed.

If past tax debt has affected your credit, our page on business loans with bad credit explains how lenders view it.

Questions to ask before you choose

Put the options side by side and ask:

• What’s the total cost? Compare the interest and fees on a loan with the ATO’s charges on an overdue amount over the same period.
• What does each do to my weekly cash? A shorter ATO plan might mean bigger instalments than a longer loan, or the reverse.
• What happens if I miss a payment? Defaulting on an ATO plan and missing a loan repayment carry different consequences.
• Is there a bigger goal? If you’re about to apply for a lease, tender or new facility, a clear ATO account may matter more than the cheapest option.

There’s no single right answer. The best option is the one that clears the debt and leaves the business able to keep lodging and paying on time from here.

Get the tax sorted

Tell us how much is owed, whether there’s a payment plan in place and how the business is trading. A real person will give you a straight answer on whether a loan helps or whether the ATO’s own plan is the better fit. Enquiring has no impact on your credit file, your situation stays with the person handling it rather than going out to a list of lenders, and honest detail on the form lets us match you properly the first time. See if refinancing your tax debt is possible.