Can You Get Business Finance If You Owe the ATO?

Sometimes. Some lenders will consider a business that owes the ATO, especially if its lodgements are up to date and it is keeping to a payment plan.

Others will decline. What matters is the size of the debt, whether you are engaging with the ATO, and what security you can offer. Deal with the debt first, and speak to your accountant before you apply for finance.

You are not alone in this. Equifax's Business Market Pulse reported active ATO defaults up 22.6% on a year earlier in August 2026, to 36,900 cases, with New South Wales, Victoria and Queensland all up by more than 22% (Australian Broker).

When can the ATO tell credit bureaus about your debt?

According to the ATO's guidance on disclosing business tax debts, the ATO may disclose a business tax debt to credit reporting bureaus when all of these are true:

• the business has an ABN and is not an excluded entity;
• it owes at least $100,000 that is more than 90 days overdue;
• it is not effectively engaging with the ATO to manage the debt; and
• the ATO has sent a notice of its intention, and the debt has not been paid or an appropriate payment arrangement made within 28 days of that notice.

The ATO says that if you are effectively engaging with it, for example by entering a payment arrangement, the debt will not be reported, even if it is $100,000 or more. The details and the list of excluded entities are on the ATO page, so read it for your own situation.

How lenders tend to see ATO debt

Lender policies differ, so treat this as a general picture, not a promise:

• Lodged and current. Lenders usually want your BAS and tax returns lodged. Unlodged returns are a common reason for a decline.
• On a payment plan, and keeping to it. Many lenders view this more favourably than an unmanaged debt, because it shows you are dealing with it. Missed payments on the plan count against you.
• Size relative to turnover. A small debt in a profitable business is a different case from a large one that has been overdue for months.
• Security. A lender may look at equity in property or existing equipment more closely than at the credit file.
• A reported debt. Where a debt has been disclosed to a credit bureau, some lenders (especially banks) may decline; some specialist lenders will still look at it, usually at a higher price.
• The reason for the debt. A one-off cause such as a late client payment or a seasonal gap reads differently from a long-running pattern.

Your options

1. Ask the ATO about a payment plan. How you arrange one depends on the size and complexity of the debt. Thegeneral interest charge keeps running on the debt, compounds daily and is reviewed each quarter, so read the current rate on the ATO's site. From 1 July 2025 it is not tax deductible (see the ATO's page ondenying deductions for ATO interest charges).
2. Talk to your accountant about the position, your BAS and a cash-flow forecast.
3. Look at your existing finance. Refinancing or restructuring an equipment loan can sometimes free up cash flow. The effect on total cost depends on the term, any balloon and fees, so compare the total, not only the repayment. Therefinance calculator →shows both.
4. Consider borrowing to clear the debt only with advice.Replacing the ATO debt with a loan can stop ATO interest and change the repayment pattern, but it adds another debt, may put assets at risk and may cost more over time. A broker can explain which lenders might consider it, but it should not be a first move.
5. Get specialist help if the debt is serious. If you cannot see how it can be paid, or you have received a director penalty notice or a creditor's demand, speak to an insolvency practitioner or a financial counsellor before taking on more debt.

What to have ready for a conversation

• Your latest BAS and income tax returns, lodged
• Your ATO account statement and any payment plan details
• Two years of financials, or recent bank statements for a low-doc enquiry
• What you want to buy or refinance, with its price and age
• A short explanation of why the debt arose and what has changed

If you are also weighing up finance for equipment, the articles ongetting finance-ready →,secured and unsecured business loans →andthe instant asset write-off →may help.

What we can and cannot do

loan-o is a finance broker, not a tax adviser or an insolvency practitioner. We can explain how lenders look at your situation and check which lenders may suit it. We cannot advise you on your tax position, promise an approval or guarantee a rate. An enquiry with us is confidential, and there is no credit check to enquire.

Accountants and insolvency practitioners who want to refer a client can useloan-o Connect →.

Sources

1. Australian Taxation Office. Disclosure of business tax debts.
2. Australian Taxation Office. General interest charge.
3. Australian Taxation Office. Denying deductions for ATO interest charges.
4. Australian Broker. Business loan demand jumps 11.3% as SMEs pull back on assets. 24 September 2026 (Equifax Business Market Pulse, August 2026).

This article provides general information only and does not take into account your objectives, financial situation or needs. It is not financial, tax, legal or credit advice. Finance is subject to lender approval, lending criteria, terms, conditions, fees and charges. Rates and lending policies can change.

Last reviewed: 8 October 2026. Credit Representative (broker): Guy Beglin, No. 550800. Corporate Credit Representative: B.K Brokers Pty Ltd (ABN 40 669 144 218) t/a loan-o, No. 550800, of COG Compliance Services Pty Ltd, Australian Credit Licence 384428. Suite 1.01, 303 Coronation Drive, Milton, Queensland 4064. Email [email protected]. Tel 1300 156 266. loan-o is a finance broker, not a lender.