Tax Debt Loans in Australia: Solutions for Financial Relief
Pay off your tax debt to the ATO in full with finance solutions that can get your business back on track.
- Get help quickly to avoid ATO penalties and charges
- Seek better rates and longer terms than ATO payment plans
- Get access to tax debt loan lenders across Australia
Apply for a Tax Debt Loan with Dark Horse Financial
1
Contact Our Team
Reach out to us via phone or through our online form. Tell us your current situation and what you need for your business.
2
Submit Application
We’ll expertly handle your application from start to finish. Some lenders can approve tax debt loans in just 24-48 hours.
3
Get Funded
Once approved, most documentation is signed electronically, making settlement fast. The lender will release funds to you or make the payment directly to the ATO at settlement.
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Understanding Tax Debt in Australia
Tax debt happens when people or businesses owe money to the ATO for different obligations, such as:
- Goods and Services Tax (GST)
- Pay As You Go (PAYG) withholding
- Superannuation guarantee charges
When you owe tax, it can have serious effects, such as fines, interest charges, and even possible legal action from the ATO. There are plenty of ways to deal with tax debt, including setting up a payment plan with the ATO. You can also use your savings or cash on hand to pay off your tax. However, a cost effective way to do it is through tax debt loans.
What are Tax Debt Loans?
Tax debt loans are types of loans that can be used to pay off outstanding debts to the ATO. These loans can help you pay off your entire tax debt all at once, which will save you from penalties and possible legal action. Depending on your circumstances, you might also be able to get better rates and terms than what the ATO offers through payment plans.
For many Australian businesses, cash flow pressure, seasonal downturns, or unexpected expenses can make it difficult to meet ATO deadlines. Tax debt loans can be a great solution to avoid penalties and maintain good standing with the ATO.
Key Features*
✔ Loan options ranging from $10,000 to $5 million
✔ Terms of up to 5 years or more
✔ Flexible repayment options
✔ Secured or unsecured options
✔ Different loan types to choose from
Benefits *
✔ Immediate end to enforcement action
✔ Preventing daily accruing General Interest Charge
✔ Protect your credit file from ATO defaults
✔ Preventing escalating enforcement action
✔ Removing financial stress and pressure
ATO Payment Plans vs Tax Debt Loans
If you cannot pay your tax obligations in full, the ATO may allow you to enter a payment plan. These arrangements spread the debt across instalments over a defined period. Payment plans can help businesses remain compliant, but they are not always the most practical option.
ATO Payment Plans
The ATO allows payment plans for many businesses, particularly when the debt is under $200,000. If your debt exceeds this amount, you will have to call the ATO directly to arrange payment. These arrangements can require an upfront payment and a maximum term of 2 years. It’s important to note that the General Interest Charge continues to accrue during the repayment period.
Tax Debt Loans
A tax debt loan works differently. Instead of paying the ATO over a short repayment schedule, approved applicants get the funds to pay off the entire debt through a lender.
Once approved, the loan clears your outstanding balance with the ATO. You then repay the lender under a structured loan agreement.
This approach can provide no upfront payment, longer terms, possibly lower rates, flexibility, and larger loan amounts.
Many businesses use tax debt loans when the ATO payment plan repayments are too high or when they need more time to stabilise cash flow.
The Differences at a Glance:
| Feature | Payment Plan | Tax Debt Loans |
| Loan Amount | Up to $200,000 | Up to $5 million |
| Upfront Payment | Minimum 5% | None |
| Maximum Term | 24 Months | 5 Years or more |
| Interest Charges | Daily accruing GIC (Currently at 10.96%) | Interest can be lower |
| Repayments | Can be higher due to short terms and high rates | Can be lower due to better rates and terms |
Types of Tax Debt Loans Australia
Dark Horse Financial offers a range of tax debt solutions designed to be flexible enough to work with your circumstances:
Unsecured Line of Credit
Lines of credit are revolving facilities that allow businesses to access funds up to a certain limit.
These facilities can be drawn from, and once repaid, the limit resets and can be used again. Interest is only charged on the borrowed amount.
Unsecured lines of credit can be approved within 24-48 hours and can be best for immediate tax debt needs.
Unsecured Loans
These loans don’t require security and are ideal for those who need to access funds right away.
Unsecured loans can range in value from $10,000 to $2,000,000. These loans can be approved faster than secured options, with some lenders providing same day approval.
Unsecured loans are best for time sensitive tax debts as they are faster to approve.
Secured Loans
A secured loan requires an asset to be used as security. This can include property, equipment, or other business assets.
Providing security can result in lower interest rates, higher loan limits, and longer repayment terms.
Secured loans are often sought out by businesses with larger tax debts and those wanting the longest term possible.
Interest-Only Loans
These options allow you to manage cash flow by paying only the interest for a specified period, usually around 1-5 years. During the interest only period, you only pay the interest on the loan rather than both interest and principal.
This reduces monthly repayments during the early stages of the loan.
There are also interest only lines of credit that can be used to payout tax debt.
Overdraft Facilities
A business overdraft is a revolving line of credit linked to your business bank account. You can draw funds up to a pre approved limit and only pay interest on the amount you use.
Once you repay what you owe, the limit resets and can be used in full again.
This option can be useful for managing ATO obligations while maintaining flexibility in your cash flow. Unsecured overdraft options can be approved within 24 hours
Equipment Finance
Equipment finance can also be used to raise capital to pay tax debt.
If your business owns unencumbered machinery or equipment, a lender may allow you to borrow against its value.
The equipment itself becomes the security for the loan.
This allows you to access funding without selling assets or disrupting business operations.
Private Lending
Private loans, including first and second mortgages, do not credit score borrowers through the application process, so they’re perfect for those with bad credit or are seeking a low doc application.
Private loans are commonly used when bank lending is not an option, the funding is urgent, or if you have complex circumstances and prefer a more streamlined application process.
Private lending may involve property security and typically has shorter repayment terms.
Sale and Rent Back
Sale and rent back is a capital raise against existing equipment via a rent to own provider.
The benefit of a capital raise from a rent to own provider is they will provide funds up to 80% of the fair market value of the equipment being used to raise capital against.
This allows you to access cash to pay your tax obligations to the ATO while maintaining the use of your essential equipment.
This helps you maintain operations and continue making revenue from the equipment.
Eligibility Criteria for Tax Debt Loans
Eligibility requirements depend on the lender and the type of facility you apply for. Some lenders prioritise speed and simplicity, while others require detailed financial documentation.
Low Documentation Options
For unsecured facilities like unsecured term loans or overdrafts, some lenders only require a read only view of your business bank statements. This allows them to quickly assess your revenue and average cash position over the past 6 months without full financial reports.
Low doc loan options typically are assessed and funded much faster than other types of tax debt loans.
Full Documentation Loans
Larger loans or secured facilities usually require full documentation. This can include:
- Financials
- Current aged payables and receivables
- Tax portals
- Your last 2 BAS
- An asset and liability statement
Lenders review these documents to assess your income, obligations and your capacity to make repayments. Almost all lenders (outside of private lending) will also take your credit score into account.
Who Offers Loans for Tax Debt?
Traditional banks are usually unwilling to provide tax debt loans. However, there are plenty of non bank and private lenders that are willing to provide funding despite any tax arrears. For unsecured lenders, they want to make sure there are no tax defaults on your credit file before approving.
The best lender for tax debt loans is the one that can provide the funding you need, with favourable rates and terms, and get it approved in the time you need to avoid penalties and action from the ATO. Our team can help you find the right lender for your business.
Debt Consolidation for Tax Debt
Debt consolidation loans allow you to combine several debts into one single loan with a single repayment. This simplifies your finances, reducing several repayments over the month into just one. It also allows you to potentially lower the amount you pay in repayments each month by securing better rates and terms.
Tax debt can be consolidated into one larger loan together with other debts, especially short term or high interest debts. This is a great way to deal with obligations to the ATO as well as other debt commitments in one move.
ATO Rules and Policy Changes That Affect Tax Debt
Before this change, businesses could usually claim these interest charges as a tax deduction. Since July 2025, this deduction has been removed.
For many businesses, this change increases the true cost of carrying ATO debt. Instead of reducing taxable income, the interest becomes a pure expense that cannot be offset.
This policy shift is one reason many business owners now consider using external funding like tax debt loans. A tax debt loan can allow you to clear the debt with the ATO in full, while paying a facility that better suits your cash flow. Additionally, business loans used to pay out tax debt are tax deductible. Many accountants direct businesses to us for the purposes of getting a loan that has tax deductible interest.
General Interest Charge (GIC)
This interest is applied when a tax debt remains unpaid after the due date.
Shortfall Interest Charge (SIC)
This interest applies when a tax assessment is amended, leading to an increase in tax liability
In Cases of Serious Hardship
In limited situations, the Australian Taxation Office may allow taxpayers to apply for a release from tax debt due to serious hardship. This option is designed for cases where paying the tax liability would leave a person unable to meet essential living or operating expenses.
The rules differ depending on whether the applicant is an individual or a business entity.
Serious Hardship for Individuals
Individuals may apply to have certain tax debts released if paying the debt would prevent them from meeting basic living costs.
When assessing a serious hardship application, the ATO reviews the individual’s full financial position. This includes income, assets, liabilities, and ongoing expenses.
The ATO typically considers factors such as:
- Household income and employment status
- Essential living expenses including housing, food, utilities, and medical costs
- Available savings and investments
- Ownership of property, vehicles, or other assets
- Existing debts and financial commitments
If the ATO determines that paying the tax debt would leave the individual unable to maintain a basic standard of living, it may approve a partial or full release of the debt. However, approval is not automatic. Applicants must provide detailed financial information and supporting documentation, and the ATO carefully reviews each case before making a decision.
Serious Hardship for Businesses
Businesses generally cannot apply for serious hardship relief in the same way individuals can. The ATO rarely releases business tax debts purely on hardship grounds.
Instead, the ATO usually provides help through other arrangements, such as:
- ATO payment plans
- Negotiated settlements
- Adjusting GST registration and reporting
- Varying PAYG instalments
Help paying employee super on time - Discretion not to offset
Help with paying if you have frozen funds
Because hardship relief for businesses is uncommon, many business owners explore alternative solutions such as paying off their ATO debt through a tax debt loan.
Case Study: $600,000 Raised to Pay Out Tax Debt Consolidation
A client approached Dark Horse Financial with a significant ATO debt. The ATO had refused a payment plan unless half the business owner’s debt was paid upfront. The client also had two existing high-interest loans, limiting their capacity to borrow more.
Dark Horse Financial’s solution:
- Proposed a $600,000 debt consolidation loan
- Utilised equity in the client’s equipment and home as security
- Paid out the entire ATO debt
- Retired the two existing high-interest loans
The outcome? Our very happy client resolved their ATO debt issue and improved their monthly cash flow by several thousand dollars.
Risks and Consequences of Not Addressing Tax Debt
Ignoring tax debt rarely improves the situation. The ATO has extensive powers to recover unpaid tax and may take action when debts remain unresolved.
Possible consequences include:
Accumulating Interest and Penalties
Unpaid tax debts continue to attract interest through the General Interest Charge. Over time, this can significantly increase the total amount owed.
With the removal of tax deductibility on ATO interest from July 2025, these costs become even harder to manage.
Director Penalty Notices
Company directors may become personally liable for certain tax obligations, including PAYG withholding and superannuation guarantee amounts.
A Director Penalty Notice allows the ATO to recover these debts directly from directors if the company does not address the liability.
Garnishee Notices
The ATO can issue a garnishee notice, requiring banks or customers to pay money directly to the ATO instead of your business.
This can disrupt cash flow and make it difficult to continue operating normally.
Legal Recovery Action
In more serious cases, the ATO may initiate legal proceedings to recover the debt. This can include court action, statutory demands, or insolvency proceedings.
Addressing the issue early provides more options and greater flexibility.
How Long Does It Take to Get a Tax Debt Loan?
Approval timelines depend on the type of loan, the lender, and the documentation required. Some facilities can be approved very quickly, while others involve a more detailed assessment.
Fast Tax Debt Loan Approval
Unsecured tax debt loans are often the fastest option.
Some lenders can approve these facilities within 24-48 hours, particularly when the application only requires a read only view of your business bank statements.
Because there is no asset valuation involved, the process is usually straightforward. Once approved, funds can be released shortly after the loan agreement is signed.
Secured Loans May Take Longer
Loans that involve property or other assets as security usually take longer to arrange.
Lenders may need to confirm ownership of the asset and conduct a valuation before approving the loan. Desktop valuations can sometimes be completed quickly, while physical valuations may take several days.
Private Lending Can Be Faster
Private lenders often specialise in urgent funding. When the loan is supported by property equity, approval and settlement may occur within just a few days. This makes private lending a potential option for businesses that need to resolve ATO pressure quickly.
Can You Get a Tax Debt Loan With Bad Credit?
Yes, it is possible to obtain a tax debt loan even if your credit profile is less than perfect.
Some lenders may decline applications when credit scores fall below their thresholds. However, many non bank lenders and private lenders take a broader view of a borrower’s situation.
Instead of focusing only on credit history, lenders may consider:
- Current business cash flow
- Assets that can be used as security
- Your plan for repaying the loan
- The overall strength of the business
Can Startups Access Tax Debt Financing Options?
Yes, startups can access tax debt financing, but with some limitations. Unsecured options are typically not available to very new businesses, and it may take a year or more of trading before they can access favourable terms.
In general, startups can access secured lending. Startups can also get more favourable terms with secured lending. Here’s what’s available:
- Secured or Asset-Based Lending
- Secured Overdrafts
- Property Equity Loans
Some lenders are more willing to lend to startups than others, so it’s important to contact our team to get access to these lenders.
What’s Considered a Large Tax Debt?
A debt becomes large when it is high relative to your turnover
A tax balance that may be manageable for a high turnover business can be serious for a smaller operation. The debt’s proportional impact determines if it’s “large” for your business.
A debt becomes large when it affects your ability to trade
Businesses generally cannot apply for serious hardship relief in the same way individuals can. The ATO rarely releases business tax debts purely on hardship grounds.
Instead, the ATO usually provides help through other arrangements, such as:
- ATO payment plans
- Negotiated settlements
- Adjusting GST registration and reporting
- Varying PAYG instalments
Help paying employee super on time - Discretion not to offset
Help with paying if you have frozen funds
Because hardship relief for businesses is uncommon, many business owners explore alternative solutions such as paying off their ATO debt through a tax debt loan.
A debt becomes large when it affects your ability to trade
The ATO doesn’t offer payment plans longer than two years. If the repayments required within that timeframe are unmanageable for your cash flow, the debt can be significant relative to your position.
ATO Debt Disclosure Rules
Credit reporting rules allow the ATO to disclose overdue business tax debts and defaults to commercial credit reporting bureaus if the following apply.
- The debt is at least $100k.
- It has been overdue for more than ninety days.
- You have not engaged with the ATO.
- You have not complied with the terms of your payment plan.
- You are not in dispute or in a formal arrangement.
Once disclosed, the tax debt appears on your business credit file. This can affect your borrowing power. Private lenders may still consider your application, but banks will usually decline loans for tax debt. Unsecured lenders will decline applications from borrowers who have an ATO default on their file. Some residential home loan lenders who are happy to provide loans for tax debt will require the loan to be paid out in full if there is a default from the ATO.
For business owners, disclosure feels like a turning point. It signals that the ATO believes you are not engaging. It also warns lenders that the business may be under strain. Avoiding disclosure means staying in regular communication and having a plan in place.
Can I Get a Loan for Large Tax Debts?
Yes, approved applicants can definitely get a loan for large tax debts, even those exceeding $1 million. A high value tax loan in Australia is not always a single product. It can be an unsecured or secured loan, a line of credit, or a combination of these.
Most unsecured lenders usually cap tax debt loans at around $300,000 or less and are generally unwilling to fund larger liabilities running into the millions. Of course there are exceptions, with some larger businesses being able to secure unsecured tax debt loans of more than $1M. This is on a case to case basis. It’s important to note that no unsecured lender will provide funding if the ATO has lodged a default against the business on CreditorWatch.
On the other hand, secured lenders can fund higher amounts where security is available. Some of these lenders focus more on the value of the asset and the business’s ability to repay or exit the loan. Private lenders also fall into this category since their lending is mostly asset based.
The right lender choice boils down to whether they can support your specific situation and provide the funding you need within the timeframe required.
Tips for Managing Tax Debt
Borrowing to pay tax debt can help a lot, but it’s important to come up with ways to avoid getting into tax debt again:
- Talk to the ATO: If you’re having trouble paying your tax, the Australian Taxation Office (ATO) wants businesses to get in touch with them as soon as possible. Call the ATO to talk about your situation and see if they could help you with a payment plan. The ATO may also offer interest-free periods or waive penalties to help you pay off your tax debt.
- Get Professional Help: A registered tax agent or accountant can give you advice on how to deal with your tax debt. They can help you understand your choices and talk to the ATO for you. Dark Horse Financial can help refer you to an accountant.
- Review and Adjust Business Finances: Look over your business’s finances carefully to find areas where you can save money or improve cash flow. This could mean changing your budget, talking to suppliers about new terms, or finding new ways to increase sales.
- Lodge All Tax Returns and Statements: Make sure that all of your tax returns and activity statements are current, even if you can’t pay the full amount you owe. This shows that you are willing to pay your tax and can help you work out a deal with the ATO.
- Put Tax First: When you plan your finances, put paying tax at the top of your priority list. Set aside some of your income each month to pay your tax and avoid going into debt.
- Think About Restructuring or Refinancing: If your business is under significant financial strain, you can restructure your business operations or refinance existing debt to help improve your financial position. We can help introduce you to a specialist in this area.
- Plan for Future Tax Obligations: Make a full tax plan to get ready for your future tax obligations. This could mean putting money aside for taxes ahead of time, keeping accurate financial records, and having a professional look over your tax situation on a regular basis.
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Taking Control of Your Tax Debt
Tax debt can be very stressful, but it doesn’t have to control your financial future. With the right tax debt loan option, you can get your finances back on track and focus on growing your business or improving your own financial situation.
Dark Horse Financial specialises in personalised tax debt loans, with amounts ranging from $10,000 to $5 million. No matter if you have bad credit, own an established business, or are just starting one, there are ways to help you keep track of your taxes.
Contact Dark Horse Financial right now to find out more about tax debt solutions in Australia and to start your journey to getting out of debt. Our team of experts is ready to help you find the perfect tax debt loan that fits your needs.
Frequently Asked Questions
Depending on the lender and the solution that fits your business, approved applicants can get an unsecured tax debt loan approved within the same day, ensuring that you can repay your debt to the ATO as soon as possible. Secured options can take longer, around a few days to weeks due to property valuations.
If you miss the deadline on your tax, the ATO will automatically impose a daily accruing General Interest Charge on your unpaid tax. If your tax debt remains unpaid and you fail to engage with the ATO, they may resort to further enforcement actions, these can include issuing a garnishee notice and a director penalty notice as well as disclosing your business tax debt default to registered credit reporting bureaus.
ATO penalty interest or General Interest Charge (GIC) is a charge imposed by the Australian Tax Office on overdue tax debts. The GIC rate changes quarterly and is based on the Australian government’s borrowing rate, with a margin added for administrative costs. This interest accrues daily, meaning that the longer the debt remains unpaid, the more interest you will have to pay.
It’s possible to get a tax debt loan approved on the same day, depending on the lender and the solution that works best for your business. Unsecured loans and overdrafts can be approved and settled within 24 hours. This will help you pay off your debt to the ATO as soon as possible.
Interest rates for secured tax debt loans can be similar to home loan rates. Loans secured by equipment can be lower than the GIC from the ATO and unsecured loans typically start at a rate that’s slightly higher than the GIC but can offer interest only terms or terms up to 5 years.
In general, the interest rates on tax debt loans depend on the type of loan (secured or unsecured), the length of the loan, your business’s credit score, and the interest rates set by the RBA at the time you apply.. We work with a group of lenders to get your business the best rates possible.
Yes, tax debt can affect your credit file if it remains unpaid and leads to the ATO lodging a default. Once the ATO lodges a default on your credit file, this will negatively impact your ability to secure future financing.
You usually can’t use super to pay off tax debt, but there are some exceptions under specific financial hardship provisions. Before you think about this option, you should talk to a financial adviser or the ATO.
The interest cost on business loans, including tax debt loans, is generally tax deductible.
For capital raises using a rent to own provider that facilitates a sale and rent back, the entire monthly repayment can be expensed on a business’s profit and loss statement which makes the whole repayment instalment tax deductible.
Talk to your accountant to get information specific to your situation.
* Disclaimer: Loans and the benefits associated with them are only available to those who have been approved. The information provided on this page is general and does not consider your individual circumstances. It is not meant to serve as a substitute for professional advice, and you should not rely on it for any decisions. Always consult with a professional regarding finance, tax, and accounting matters before making any choices or taking action.