How Long to Pay an ATO Debt? Options for Businesses
How long to pay an ATO debt depends on the type of tax, the lodgement and the taxpayer's circumstances, and the ATO sets and publishes the due dates. A business can confirm the due date for its own debt through the ATO's business pages and online services, and any extra time is a matter for the ATO rather than a lender.
Looking at finance as one option? Check your eligibility to see if you qualify.
Key takeaways
- The ATO, not a lender, sets the due date and the terms for a tax debt.
- Interest charges and further recovery steps can follow when a debt is overdue, so contacting the ATO early is generally encouraged.
- The ATO may offer payment plans depending on circumstances, and it decides eligibility and terms.
- HomeSec lends for business and investment purposes only, secured by real estate, and funds can be paid straight to the ATO.
- Eligibility depends on the lender’s assessment.
How long does the ATO give a business to pay a tax debt?
There is no single timeframe. The due date depends on the type of tax, the lodgement and the taxpayer’s circumstances, and the ATO sets and publishes it.
This article does not list specific deadlines, because they can change and differ between obligations. The ATO’s business pages and online services are the place to confirm the due date for a particular debt.
The ATO also sets the timeframe and terms for paying a tax debt, and a lender does not. A lender’s role is limited to its own loan terms, which are separate from anything the ATO decides.
What can happen when a tax debt is not paid on time?
An overdue tax debt can attract interest charges, and the ATO can take further steps to recover what is owed. The ATO publishes current details, so readers should check its pages rather than rely on figures from third parties.
Early contact is generally encouraged when a debt cannot be paid by its due date. Raising the issue before the date passes gives the ATO the chance to discuss the circumstances.
For a related topic, see the page on help with an ATO debt and what each option does.
Can you ask the ATO for a payment plan?
The ATO may offer payment plans depending on the circumstances. It decides eligibility and sets the terms.
This article does not describe plan lengths, thresholds or the likelihood of a plan being offered. Those details come from the ATO and can change.
The business.gov.au website has general information about managing business finances and obligations, which can help with background reading.
Can a business loan be used to pay an ATO debt?
Some businesses look at finance secured by property to clear a tax debt. HomeSec provides credit wholly and exclusively for business and investment purposes, and a business purpose is the one thing that must be present. Read more on business loans to pay ATO tax debt.
Key points from HomeSec’s lending criteria:
- Borrowers can be companies, trusts and sole traders, including start-ups.
- Security can be residential, commercial, rural or vacant land, under a first or second-ranking mortgage, and the borrower’s home can be the security.
- Loan amounts run from $20,000 to $5,000,000.
- The loan-to-value ratio goes up to 80% on residential security and up to 70% on commercial.
- Funds can be paid to the borrower’s account or straight to the ATO.
Credit for business and investment purposes is not regulated under the National Consumer Credit Protection Act 2009 (the NCCP Act), and the protections available to consumer borrowers do not apply.
Who might this suit, and when is it not the answer?
Property-secured business finance may suit a business owner who has real estate to offer as security and a genuine business purpose for the funds.
It is not a fit in these situations:
- There is no real-estate security to offer.
- The loan would sit third behind two existing mortgages.
- The money is for personal or domestic purposes.
An ATO payment plan alone may be enough for some businesses, and that is a matter for the ATO and the business’s own circumstances.
How do an ATO payment plan and business finance compare?
| Feature | ATO payment plan | Property-secured business loan |
|---|---|---|
| Who sets the terms | The ATO | The lender, subject to assessment |
| Repayments | Set by the ATO, so check with them | Interest-only, or interest capitalised for up to 6 months |
| Security | Check requirements with the ATO | Real estate, first or second-ranking mortgage |
| Paying the ATO | Arranged with the ATO | Funds can go straight to the ATO |
How does the HomeSec application process work?
The process has three steps, and every application is subject to assessment.
- Tell a Lending Manager about the deal. Cover the amount, purpose, timing, the property and how the loan gets repaid. The Lending Manager gives an indicative answer on that call, usually in minutes.
- Conditional approval. This needs photo ID, a rates notice and the most recent mortgage statement, and takes about fifteen minutes.
- Funds released. Funds can be released in as little as 24 hours from a clean, complete scenario, with a typical range of 24 to 72 hours.
For an indicative answer, the Lending Manager asks for seven details:
- the property’s rough worth (an own estimate is fine)
- its address
- what is owing on it, and to whom
- how much is needed
- for how long
- how many people are on the title
- what the money is for
No cashflow records, financial records, sworn valuation, minimum trading period or serviceability test are required. Credit history is considered, but it is never disqualifying on its own. For more on timing, see how long a business loan takes.
What do fees, repayments and loan terms look like?
A small commitment fee is payable only once the loan is conditionally approved. HomeSec lists no valuation, monthly, early exit or extension fees.
Repayments are interest-only, or interest can be capitalised for up to 6 months. The term is open, starting from one month, and the borrower chooses it, can extend it and can repay early with no penalty. Ad-hoc paydowns are available from $10,000 once outside the capitalised-interest period.
The interest rate is set per scenario and priced against the loan amount and the security.
What should you weigh up when comparing options?
Comparing options usually comes down to a few general questions:
- What is the total cost of each option?
- How would repayments work?
- What is the risk to any property used as security?
Moneysmart has general information on borrowing, and the ATO has its own information on options for tax debts. Independent professional advice, such as from an accountant, may help a reader understand their own circumstances.
What is the next step?
If you would like to see whether property-secured business finance could work for your situation, start your application and see if you qualify. Have your photo ID, a rates notice and your most recent mortgage statement to hand. It takes a few minutes to start, and eligibility depends on the lender’s assessment. No obligation. Eligibility is subject to assessment.
FAQ
Can the ATO give a business more time to pay a tax debt?
The ATO may offer payment plans depending on the circumstances, and it sets eligibility and terms. Contacting the ATO early is generally encouraged if a debt cannot be paid by its due date. Readers should check the ATO’s business pages for current details, as this article does not describe plan lengths or thresholds.
Can a business loan be used to pay an ATO debt?
HomeSec provides credit for business and investment purposes, secured by real estate, and eligibility depends on the lender’s assessment. Funds can be paid straight to the ATO. It is not a fit where there is no real-estate security, where the loan would sit third behind two mortgages, or where the money is for personal purposes.
Can loan funds be paid directly to the ATO?
Yes. Funds can be paid to the borrower’s account or straight to the ATO. Release can happen in as little as 24 hours from a clean, complete scenario, with a typical range of 24 to 72 hours. Every application remains subject to assessment.
Does a poor credit history rule out a loan to pay a tax debt?
Credit history is considered, but it is never disqualifying on its own. Defaults, arrears and thin files do not rule a borrower out. The outcome still depends on the lender’s assessment, including the real-estate security on offer and the business purpose of the funds.
This is general information only and does not take into account your objectives, financial situation or needs. All applications are subject to lending criteria, assessment and approval. Fees and charges may apply.