ATO Debt Is Getting More Expensive: Why Business Owners Should Review Their Lending Options
If you have an ATO debt, a payment arrangement may not be your only option.
ATO debt has become a growing pressure point for many Australian business owners. Between cash flow gaps, rising costs, tax obligations, BAS payments and business loan repayments, it can be easy for tax debt to build up quietly in the background. For a long time, many businesses have treated an ATO payment arrangement as the default solution, but it is not always the most cost-effective or finance-friendly way to manage tax debt.
Why ATO debt needs attention sooner rather than later
From 1 July 2025, interest charged by the ATO on late payments and underpayments is no longer tax deductible, the real cost of carrying ATO debt may be higher than many business owners realise. Unpaid tax debt can also create issues when applying for finance, and for some businesses may impact their credit profile.
Is an ATO payment arrangement always the best option?
Not always. A payment arrangement can be useful for short-term, manageable debt, but it can place pressure on monthly cash flow and may make future finance applications more difficult. In some cases, a lending solution may provide a cleaner, more structured way to manage the debt.
How lending solutions may help with ATO debt
- Paying out overdue ATO debt, clear the balance and replace it with a structured loan repayment.
- Paying out an existing ATO payment arrangement, consolidate into a loan for more predictable repayments.
- Allowing an ATO payment plan to remain in place, some lenders accept this while addressing other lending needs.
- Payout of Small Business Restructure debt, a pathway forward after a formal restructure.
Flexible income verification options
Business financials aren't always straightforward. Depending on the lender and scenario, options may include 1 year of financials signed by an accountant, 6 months of BAS printed from the ATO portal, 6 months of business bank statements, or an accountant's letter.
Who may benefit from an ATO debt lending review?
- Have an overdue ATO debt.
- Are currently on an ATO payment arrangement.
- Are struggling with cash flow because of ATO repayments.
- Have business tax debt that is making it harder to access finance.
- Want to consolidate tax debt into a more structured repayment.
- Have recently completed, or are working through, a Small Business Restructure.
- Need flexible income verification options because your financials are not straightforward.
See how we help on our ATO debt loans page, or book a confidential chat whenever you're ready.
If cash flow is the bigger picture, our guide to small business cash flow finance covers the options. Or get in touch with Mesh Finance for a confidential, no-obligation chat about your ATO debt options.