Loan type ATO Debt & Specialist Lending

Why tax debt is different from other business debt

Most creditors send reminders. The ATO has powers. It can issue garnishee notices that redirect money owed to you, or sitting in your bank account, straight to it. It can report significant business tax debts to credit reporting bureaus. And it can issue director penalty notices.

That last power is why tax debt deserves more attention than it usually gets. Under the director penalty regime, company directors can become personally liable for certain unpaid company amounts: PAYG withholding, superannuation guarantee charge and, since 2020, GST. If those amounts aren't reported to the ATO on time, the ways out of personal liability narrow sharply. A company's debt can quietly become a director's.

The logic behind it is simple. GST and PAYG withholding were never really the business's money. They were collected on the government's behalf, and the law treats them that way.

A payment arrangement with the ATO can help, but it comes with conditions, and the general interest charge keeps accruing on the balance. A loan replaces an open-ended liability with a defined one.

GST funding is a different problem with a similar answer. When a business buys property or goods that attract GST, it may have to pay the GST at settlement and claim it back later through its BAS. A short-term loan covers the gap between the two.

When it helps

• Clearing an ATO debt. Paying out the balance, including a debt already under a payment arrangement.
• A director penalty notice. When personal liability is on the table and time matters. Speak to your accountant or a qualified adviser straight away, as the deadlines are short.
• GST on a purchase. Funding the GST at settlement until it's claimed back.
• Clearing the way for a refinance. A tax debt on the file can stop a mainstream refinance. Paying it out first can reopen that door.
• Scenarios that don't fit. A recent loss, a restructure or a complicated structure that still makes sense on the facts.

How it works

1. Tell us the scenario. What's owed and to whom, any arrangement or ATO correspondence, the security, how much you need and when.
2. We match it to lenders. In the first conversation we'll tell you whether it fits a lender in our group or network, and what we need to take it further.
3. The lender assesses it. They look at the security, the business, how the debt arose and the exit, and make the credit decision.
4. Funds, then exit. Funds often go straight to the ATO at settlement, and the loan is repaid from the business, a sale or a refinance, as agreed at the start.

What lenders look at

A specialist lender isn't put off by a tax debt. It's put off by one nobody can explain.

Lenders want to know how the debt arose (a hard year, fast growth, a one-off event, bookkeeping that fell behind), whether lodgements are now up to date, and what has changed since. Current lodgements matter more than most people expect: they show the ATO and the lender that the problem is known and contained.

Then security and exit. Property is the most common security, though some lenders will consider established businesses with strong cash flow on other terms. As with any specialist loan, a clear, supported plan for repayment does more for an application than almost anything else.

What it costs

Specialist lending is priced above mainstream finance, and the reason is structural: these lenders take on scenarios others won't assess, and they price for the extra work and risk. The fair comparison isn't with a bank rate you can't get. It's with what the debt costs if nothing changes: the general interest charge, the risk of garnishee action and, for directors, personal exposure.

Getting indicative terms costs you nothing, and any fees are agreed with you up front, before any work starts.

This page is general information only. It isn't financial, credit or legal advice and doesn't take into account your particular circumstances. Lending decisions are made by the lender.