ATO debt help for small business: triage before you choose a fix

“ATO debt help” means very different things depending on where you are. A café owner two weeks behind on a BAS needs a phone call and a plan. A director holding a lockdown DPN needs money inside 21 days. Giving them the same advice is how people end up with the wrong fix. So before options, triage: what stage has your debt reached?

What stage is my ATO debt at?

Find the row that matches your latest contact from the ATO.

Stage	Signs	How urgent
1. Overdue	Reminders by SMS, myGov or letter; no legal notices yet	Weeks — but act now
2. Warning	Letters describing what the ATO may do next	Days to weeks
3. Notice of intent to disclose	Letter giving 28 days before reporting to credit bureaus	28 days
4. Director penalty notice	Personal liability after 21 days	21 days
5. Garnishee	Bank, customers or card provider told to pay the ATO	Already happening
6. Legal action	Statutory demand, bankruptcy notice, court claim, wind-up	21 days or a hearing date

If you’re at stage 4 or later, jump to the relevant letter page: director penalty notice, garnishee or statutory demand. The debt letter triage tool will give you the exact dates.

What are the options at the early stages?

At stages 1 to 3, you still have the full menu.

• Lodge everything. The ATO says to lodge by the due date even if you can’t pay. Unlodged BAS is also what turns an ordinary DPN into a lockdown DPN later.
• Set up a payment plan. If the business owes $200,000 or less, you may be able to do it online. Be honest with yourself about what the business can carry alongside new BAS as they fall due.
• Pay part now. A meaningful lump sum can make the ATO more flexible on the rest.
• Refinance the debt. Pay the ATO out with a loan, and repay the lender on a schedule that fits your cash flow.

Free help exists too. business.gov.au points owners to the Small Business Debt Helpline (1800 413 828) for financial counselling.

Payment plan or refinance: which costs less?

The honest answer is “it depends”, but a few things have shifted the maths:

• ATO interest isn’t deductible any more. From 1 July 2025, general interest charge and shortfall interest charge can’t be claimed as a tax deduction. Interest on a business loan used for business purposes generally can be, subject to your accountant’s advice.
• Plans fail under pressure. A plan that needs every future BAS paid on time plus instalments is fragile. Defaulting on a plan can bring firmer action faster.
• Plans keep the ATO in the picture. A refinanced debt is owed to a lender instead. For some owners, that alone is worth a great deal.

When you compare, ask for an “estimated total cost of finance” figure from any lender, and set it against the interest you’d accrue on a plan over the same period. We never quote rates on this site because every loan is priced on the business’s own circumstances.

If you’d like that comparison done with your real numbers, a short enquiry gets a person looking at it. No credit check happens at that stage.

What does refinancing ATO debt involve?

A lender pays the ATO in full, and the business repays the lender. What makes it possible:

1. Security or cash flow. Property-secured loans run between $20,000 and $5,000,000 against residential or commercial property owned by the business, a director or a related party. Unsecured and cash-flow options, generally between $5,000 and $500,000, are sized to what your turnover and bank statements can support.
2. An explanation. Why the debt built up — a bad season, a big customer paying late, rapid growth — and why it won’t happen again.
3. An exit. How the new facility will be repaid or refinanced later.

ATO debt is considered case by case. It is not an automatic “no”.

An illustrative example

Illustrative only. A Hobart bakery with two shops falls behind on GST and PAYG withholding after a slow winter. The owners set up an online payment plan, but within two quarters they miss an instalment while also paying the current BAS. Rather than wait for a DPN, they use equity in their home to take out a second mortgage, pay the ATO in full and set a monthly transfer into a dedicated tax account. Our guide to early warning signs of cash trouble explains that kind of routine.

How do I stop this happening again?

• Move GST and PAYG withholding into a separate account every time you’re paid, not at BAS time.
• Watch the calendar: monthly BAS are due on the 21st of the following month, and quarterly BAS on 28 October, 28 February, 28 April and 28 July.
• Consider a line of credit as a buffer once the debt is cleared, so a slow month doesn’t become an ATO problem.
• Keep your ASIC-registered address current so letters reach you — see our registered address guide.

Want a real person to look at your ATO debt?

We help business owners with tax debt every day, at every stage, and we don’t treat an ATO balance as a reason to say no. If paying it out is right for your business, we’ll help you get there. If a plan makes more sense, we’ll tell you.

It takes about a minute to enquire, and there’s no credit check when you do. We don’t send your details to a list of lenders, so you won’t be flooded with calls. A real person reads your enquiry and rings you. Please fill in the ATO amount, the stage it’s at and any property accurately — it’s what lets us match you properly first time.

Find out if you can clear the ATO debt →