Owe the ATO? What to say when you call about a business loan

Why owing the ATO feels harder to say than it is

Of all the awkward things business owners bring up on the phone, ATO debt is the one people most often hold back. It feels like an admission. In practice, it’s one of the most common situations a business lending specialist deals with. Tax falls due in lumps, on quarterly BAS dates, at the end of the income year and in super payments, while cash comes in unevenly. Plenty of well-run businesses end up behind at some point.

What makes the difference on a lender call isn’t whether there’s a debt. It’s whether the specialist knows about it early enough to point you in the right direction.

The four facts to give

When you mention an ATO debt, give the specialist these four things:

1. Roughly how much. A figure or a range.
2. What it’s made of. BAS (GST and PAYG withholding), income tax, super guarantee charge or a mix. Different components can be viewed differently.
3. Are lodgements up to date? Unlodged BAS or tax returns can be a bigger hurdle for some lenders than the debt itself, because without them nobody knows the true position.
4. Is there a payment plan? And if so, are you keeping up with it?

A script you can adapt

“Before we go further, I should mention there’s about $55k owing to the ATO, mostly GST and PAYG from the last two quarters. All our BAS are lodged and up to date. We set up a payment plan in July and we’re keeping to it, but it’s tight. I’d like to clear it or at least ease the pressure.”

Illustrative example only.

And a version for a more difficult situation:

“There’s an ATO debt, around $140k. Two BAS are still to be lodged, and I’m not on a payment plan yet. I know I need to deal with it. I own a commercial property with some equity.”

Illustrative example only.

Both are fine to say. The second tells the specialist that lodgements need to be caught up, which is useful to know straight away, and that property security may open options. If property is part of your picture, our page on describing property as security shows how to put it in a sentence.

How lenders tend to look at ATO debt

Lenders don’t all take the same view, which is exactly why telling the specialist matters. Broadly:

Your situation	How it’s often seen
Small debt, lodgements current, payment plan being met	Often manageable, especially with steady turnover
Larger debt, lodgements current, property available	Property-secured loans can be used to clear the debt
Lodgements behind	Usually needs catching up before or alongside an application
No payment plan and debt growing	Some lenders will decline; others will consider it with security
Debt being reported to credit bureaus	Assessed case by case; property security often central

The ATO may report business tax debt information to credit reporting bureaus when a business with an ABN has at least $100,000 overdue by more than 90 days and isn’t engaging with the ATO to manage it. Engaging with the ATO, even before you’ve sorted funding, is almost always worth doing.

Check your numbers before you ring

You’ll get more from the call if you know the actual balance. In the ATO’s online services for business, the Accounts and payments area shows each account’s balance, transactions and any overdue amount. Your tax agent or bookkeeper can confirm it too.

If you’re not yet on a payment plan, it’s worth knowing that businesses owing $200,000 or less can usually set up a plan online themselves, and only one online plan can be in place at a time. For larger amounts, you’ll need to speak with the ATO. A payment plan and a loan aren’t either-or: some owners use a plan for part of the debt and finance for the rest.

When to call: the BAS calendar

A lot of calls to us cluster around BAS due dates. For quarterly lodgers, those are 28 October, 28 February, 28 April and 28 July; monthly lodgers are due on the 21st of the following month. If you can see a BAS payment coming that you won’t be able to meet, ringing a few weeks ahead gives far more options than ringing the day before.

What not to do

• Don’t round the debt down to make it sound smaller. The real figure will appear in documents later.
• Don’t leave out the super component. Unpaid super is treated seriously.
• Don’t assume it rules you out. Many owners with ATO debt find workable options, particularly where property is available.
• Don’t forget other debts. If there are loans, cards or supplier arrangements as well, list them too. See talking about existing debts.

If the ATO debt comes with a hard date, such as a notice or a payment plan instalment you can’t meet, read what to say about a tight deadline and use the call planner to find a time to ring today.

Next step: ring with the four facts

If you’ve got the amount, what it’s made of, your lodgement status and your payment plan status, you’re ready. Call 03 4059 1829, or if you’d prefer to set it out in writing first, start the 60-second enquiry and mention the ATO debt in your answers. Making an enquiry doesn’t involve a credit check, your details aren’t passed along to a crowd of lenders, and a real person works through the tax side with you. Please give the true figures, because that’s what lets us match you to a lender who can actually help.