Can't pay your BAS this quarter? What happens next, and how to get ahead of it

An unpaid BAS is where most ATO debt starts. It’s rarely dramatic: a quiet quarter, a big customer paying late, or a new hire that took longer to pay for itself than planned. The BAS falls due, the account can’t cover it, and the owner decides to deal with it next month. The difference between a hiccup and a crisis is what happens in the next few weeks.

Why lodge a BAS you can’t pay?

Because lodging and paying are separate obligations, and lodging is the one that protects you.

For a company, the BAS is how GST and PAYG withholding are reported to the ATO. Under the director penalty rules, if those amounts are reported within three months of the due date, a director who later receives a DPN still has several ways to clear it. If they aren’t reported in time, the penalty is locked down and only payment will do. We explain the difference on our director penalty notice page.

Lodging also:

• shows the ATO you’re engaging, which it weighs when deciding on firmer action
• gives you an accurate figure to plan around, rather than an estimate
• keeps your records in the shape a lender will need if you decide to fund the payment

What happens after the due date passes?

Timeframe	What typically happens
Day 1 onward	General interest charge starts accruing daily
First weeks	Reminders by SMS, myGov inbox, phone or letter
Following months	Warning letters; possibly a request to set up a plan
Once debt is significant and you’re not engaging	Firmer action: DPN, garnishee, notice of intent to disclose
If still unresolved	Legal action: statutory demand, court claim, winding up

The ATO decides the pace case by case. It told tax professionals in late 2024 that it would move more quickly to DPNs and garnishees for businesses that ignore reminders and don’t set up arrangements. Engaging early slows everything down.

What are my options before the BAS becomes a bigger debt?

1. Call the ATO before the due date on 13 11 42. Explain what’s happened and what you can pay. Our guide on calling the ATO when you can’t pay walks through it.
2. Set up a payment plan if the debt is modest and the next BAS won’t be a problem. Online plans are available for debts of $200,000 or less.
3. Chase your own debtors. If customers owe you more than the BAS, a firm round of collections may solve it.
4. Fund the BAS. Short-term funding pays the ATO now, and you repay as customers pay you. This avoids interest you can’t deduct and keeps the ATO off your back.

If option four looks right, a 60-second enquiry is all it takes for someone to look at it with you, and there’s no credit check involved.

What kind of funding pays a BAS?

• Unsecured or cash-flow funding, generally between $5,000 and $500,000, measured against turnover and the last few months of statements. This is the most common fit for a single BAS. There’s more on unsecured rescue funding.
• A line of credit, which can be drawn for the BAS and repaid as cash comes in, then used again next quarter if needed.
• Property-secured loans between $20,000 and $5,000,000 if several quarters have built up, or other debts need clearing at the same time.

A lender will look at your recent bank statements to confirm the business is trading and able to service the facility. One late BAS in an otherwise healthy business is an easy story to tell.

An illustrative example

Illustrative only. A Canberra IT services firm invoices a government client for a large project in June, but the payment isn’t expected until September. The quarterly BAS due on 28 July includes GST on that invoice. The director lodges on time, then takes a short-term unsecured facility to pay the BAS. When the client pays in September, the facility is cleared. No interest charges from the ATO, no reminders, and no risk of a lockdown DPN.

How do I stop this happening next quarter?

• Set aside GST as it arrives. A separate account that receives a fixed percentage of every deposit takes the surprise out of BAS day.
• Check your GST accounting basis with your accountant. Businesses that pay GST on invoices rather than cash receipts can end up paying tax on money they haven’t collected yet.
• Know your dates — the 21st for monthly lodgers, and 28 October, 28 February, 28 April and 28 July for quarterly lodgers.
• Look ahead to EOFY. Our guide on a tax bill bigger than expected covers the annual version of this problem.

If more than one bill is due at once, the which-debt-first sorter will help you decide the order.

Could funding take this quarter’s BAS off your plate?

We work with plenty of owners who aren’t in serious trouble — just a timing gap between paying the ATO and being paid by customers. Closing that gap early is the cheapest remedy there is.

The enquiry takes about a minute. There’s no credit check when you first ask, and your details stay with us rather than being passed around a queue of lenders. A real person reads it and calls to talk through your BAS and your options. Please enter your turnover, the BAS amount and when you expect to be paid accurately, so we can suggest the right fit.

See if we can fund this quarter’s BAS →