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Business Tax Debt Loans

Updated 21 Aug 2025

Compare your best tax debt loan options from 50+ lenders and get expert support with your application.

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Sean Callery Editor Money.com.au
Tony Penn - Money.com.au Asset Finance Broker
Money's asset finance expert, Phil Collard

Our business finance experts are here to help.

Business tax debt loan

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What is a tax debt loan?

Tax debt loans are used by businesses to repay overdue tax to the Australian Taxation Office (ATO) when a payment plan is either unavailable or unsuitable.

If you own a business or operate as a sole trader, you are required to submit an end-of-year tax return, as well as a quarterly Business Activity Statement, and not paying your tax bill can damage your credit score.

If you don't have funds available to pay your bill in full, the ATO offers payment plans for tax debt up to a certain limit (e.g. if you owe $200,000 or less, you can apply to set up a payment plan online).

However, you are generally still required to make a large lump sum contribution towards your bill upfront.

In this scenario, or where a payment plan is not available, businesses may be able to use short-term business finance to repay the debt.

Here's what a tax debt loan can offer:

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  • Borrow from $5,000 to $1 million
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  • Terms from one month to five years
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  • Simple application and approval
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  • Fixed or variable interest rates
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  • Loan can be secured or unsecured
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  • Interest rate tailored to you
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  • Lenders will consider the reason for the tax debt
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In recent years, the ATO has become much more strict on businesses with tax bills, with much shorter payment plans available and higher upfront payments required.

From 1 July 2025, the General Interest Charge and Shortfall Interest Charge (which compounds daily) are no longer tax deductible, meaning businesses with overdue tax debts have higher costs.

This is why many more businesses are choosing to clear their debt using a business loan that can be structured over a longer repayment time-frame, with more flexibility built in.

Who's eligible for a tax debt loan?

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  • Own a business and have an ABN
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  • Business is GST-registered
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  • Australian citizen or permanent resident
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  • Minimum business-operating time of six months
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  • Can provide business bank statements to demonstrate capacity to repay the loan (based on revenue)
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  • The tax debt is not due to a fundamental issue with your business

Types of tax debt that can be financed with a loan

Lenders assess loan applications based on the risk level of the borrower. There are various reasons you may find yourself with significant tax debt to repay, and the cause for your debt may affect how lenders assess your application. For example:
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Accounting error

If your tax debt is the result of an accounting error, lenders may look on your situation favourably if the error is a random, one-off occurrence and not reflective of your reliability as a business owner.

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Capital Gains Tax bill

If your tax debt is due to Capital Gains Tax (CGT), lenders are more likely to approve a tax debt loan as the situation is often a one-off occurrence caused by higher than expected growth and generally not reflective of your risk as a borrower.

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Failure to lodge tax return

If your tax debt is the result of not lodging your return, lenders may consider you a high-risk borrower due to concerns of reliability in repaying the loan amount.

Consolidating tax debt into a larger loan for another purpose

Money's asset finance expert, Phil Collard

Phil Collard, Money.com.au Commercial Finance Expert

"We see it very often where the initial finance inquiry may not be as a result of a customer wanting to clear a tax debt, but fundamentally it does help if we clear that by consolidating it into one loan. For example, the customer might ask for $30,000 for stock, and they've also got a $20,000 tax debt. The business is often best served by consolidating that new finance and the existing debt into one loan for $50,000. That way they’re getting more favourable terms on the existing debt, with an injection of cash flow as well."

Phil Collard, Money.com.au Commercial Finance Expert

How to choose a business loan for tax debt?

There are different kinds of loans that can be used to pay off tax debt. Each has its own features, advantages and disadvantages, and the one that will be best suited will depend on the business applying for the finance and its level of tax debt.

The main options...

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Short-term secured loan

These are often used by businesses to cover sudden expenses - such as a tax debt. However, you can also use short-term secured business loans for various purposes, such as paying employees, securing stock, settling unpaid bills and covering day-to-day operating expenses

Repayment terms are often flexible to suit the borrower and, If you are applying for less than $150,000, non-bank lenders may offer same-day approval when applying online.

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Unsecured business loan

Unsecured business loans can be used to repay your ATO debt without risking your personal or business assets. Interest rates will typically be higher than secured finance and the loan term is usually shorter.

With an unsecured business loan, lenders will assess your ability to repay the loan based on factors such as your business cash flow, turnover and credit history. You will likely also be be asked to provide a personal guarantee for the finance.

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Invoice finance

Invoice finance could be used to repay your ATO debt if you operate a business that invoices its customers. Invoice finance is not a loan but an advance of cash on your business invoices, you won’t be paying high rates of interest as you would on an unsecured business loan. However, fees will apply.

Invoice finance offers unique benefits over standard loans, including fast approval, no repayments as the finance is not a loan, no interest to repay (fees do apply though).

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Line of credit

Instead of opting for a term loan, a revolving business line of credit or business overdraft can be a convenient way to access funds to clear a tax debt. That way you can draw down funds while retaining access to a set credit limit even after you have repaid the initial amount borrowed.

The drawback is the repayment schedule is generally less structured and interest costs can mount if you're not paying down the balance consistently.

Who offers tax debt loans for businesses?

It may be possible to get finance for a tax debt from a bank, credit union, online or specialist lenders, or through a commercial finance broker.

Most lenders will provide finance to eligible businesses for any legitimate business purpose, including providing funds to pay creditors.

However, given the nature of why the business is applying for finance, some mainstream lenders (e.g. major banks) may be reluctant to approve tax debt loans. For this reason many businesses seek finance from specialist lenders.

Just bear in mind that these lenders generally charge higher interest rates (compared to a loan to finance an asset, for example).

What to do if you can’t pay your business tax

If your business has a large tax debt that you can't pay, you should first call the ATO to see if you can arrange a payment plan.

A pragmatic approach to the situation is often the best way to avoid ongoing debt and maintain a healthy credit score.

Business owners who contact the ATO to manage their tax debts are often looked upon favourably, and setting up a payment plan ensures tax debt information is not reported to credit bureaus.

Interest-free tax repayment options

The ATO offers an interest-free repayment solution to small businesses in certain situations. The small business must be able to clear its tax debt within 12 months, and eligibility is dependent on specific conditions:

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  • Annual turnover of less than $2 million
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  • Recent Business Activity Statement (BAS) debt of $50,000 or less
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  • Overdue BAS debt does not exceed 12 months
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  • Maximum of one payment plan default in the previous 12 months
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  • Clean history of lodging BAS with the ATO
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  • Does not qualify for business finance to cover the debt
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  • Business turnover indicates continued revenue and capability in repaying the debt
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  • To apply for an interest-free payment plan, you will need to contact the ATO directly
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Business tax debt loans FAQ

Businesses in Australia are required to lodge an end-of-year tax return. However, it is more likely that a Business Activity Statement (BAS) will be the reason small businesses seek loans to repay tax debt.

Businesses are required to lodge their BAS with the ATO at various frequencies, depending on their GST turnover:

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  • Quarterly - If GST turnover is below $20 million
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  • Monthly - If GST turnover is $20 million or higher
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  • Annually - If you are voluntarily registered for GST, and your GST turnover is less than $75,000

The majority of businesses will lodge their BAS quarterly. The ATO provides specific due dates for lodging your BAS, and failing to lodge your BAS may incur a penalty.

Quarterly dates for lodging BAS:

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  • Quarter ending 30 September: 28 October
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  • Quarter ending 31 December: 28 February
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  • Quarter ending 31 March: 28 April
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  • Quarter ending 30 June: 28 July

Not paying your business tax can negatively impact your business credit score. The Australian Taxation Office (ATO) may disclose a business's tax debt information to credit bureaus, which can affect a business's credit rating and make it harder to gain approval on finance in the future. Even if you can access credit in future, a poor credit score could mean:

The ATO is likely to refer business tax debts to credit bureaus in the following situations:

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  • The tax debt is greater than $100,000 and has remained unpaid for over 90 days
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  • The business is not in the process of disputing the tax debt
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  • The business has not arranged a payment plan with the ATO

If a business does not meet the above reporting criteria, the ATO will often contact the business and provide a notice period of 28 days before reporting its tax debt.

If your business is registered for GST, or you are personally registered for GST and operating as a sole trader, then you will need to lodge a BAS with the ATO. The frequency you are required to lodge your BAS will depend on the GST turnover of your business.

GST turnover is defined as your total business income. This is calculated as your total gross income, minus any GST included in sales to customers and sales made outside of Australia.

If you cannot pay your tax debt, you need to contact the ATO. Avoiding your tax or BAS obligations will only incur penalties, and possibly cause the ATO to refer your debt to a credit agency. If you contact the ATO as soon as possible, they will work with you to establish a payment plan, which in some cases may be interest-free.

Yes, if you don't repay your tax debt, the ATO may disclose this to credit reporting bureaus. This would have a negative impact on your credit score and could impact your business's ability to access credit in future.

The application process for a small business loan is typically faster with a specialist lender than with a bank lender. That’s because specialist online lenders have less stringent eligibility criteria and use technology to assess your business information, credit report, and bank transactions.

No, you generally don't need an upfront deposit for a business loan. But, there are instances when a lender may require a 10-20% deposit. This usually applies if your business has been trading for less than two years or if you don't own property and want to borrow more than $150,000.

It's important to note that a deposit is not the same as security (collateral), and you must provide collateral if applying for a secured business loan.

Yes, you can still qualify for a business loan if you have a poor credit rating (or no credit rating), although it will likely need to be through a specialist lender. Bad credit business loans are similar to standard unsecured loans but usually feature higher interest rates.

In most cases, lenders will allow you to repay your loan early, although early termination fees may apply. If you plan on repaying your loan amount early to reduce your interest payable, check with your lender upfront whether you’ll incur fees or penalties for doing so.

Make sure that early termination fees on a business loan don't offset the interest savings you’d make by paying off the loan sooner.

Sean Callery is the Editor of Money.com.au. He has over 15 years of international experience. He is qualified with a Certificate IV in Finance and Mortgage Broking (FNS40821) and is compliant to provide general advice in Tier 1 General Insurance (RG 146) products.

Jared Mullane is a finance writer with more than eight years of experience at some of Australia’s biggest finance and consumer brands. His areas of expertise include energy, home loans, personal finance and insurance. Jared is qualified with a Certificate IV in Finance and Mortgage Broking (FNS40821).

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