Managing ATO Tax Debt: Why Business Finance May Now Be the Smarter Option

ATO Debt Is Getting More Expensive

If you’re struggling with tax debt, you’re not alone. Many business owners fall behind on BAS, GST, PAYG or income tax — but the cost of carrying that debt is increasing fast.

What Is the General Interest Charge (GIC)?

The ATO applies GIC to overdue tax amounts. As of 1 January 2024, it’s set at 11.15% annually — that’s 0.0305% per day.

For example, a $40,000 ATO debt over 12 months would rack up over $4,400 in interest alone.

Upcoming Change: GIC Becomes Non-Deductible

From 1 July 2025, GIC charges will no longer be tax deductible — meaning you’ll pay them from after-tax profits.

This makes it more costly to rely on ATO payment plans.

Why Consider Business Finance Instead?

• Lower Interest Rates — Business loans can start from 8–10% depending on your profile.
• Tax Deductible Interest — Most business loan interest remains deductible.
• Predictable Repayments — Structured payments help with planning.
• Reduced Risk — Pay out ATO debt to avoid DPNs or legal action.

Types of Finance Options

1. Unsecured Business Loans — Fast access without collateral.
2. Invoice Financing — Unlock funds from unpaid invoices.
3. Business Line of Credit — Flexible funding when you need it.
4. Asset Finance — Use business assets to secure better rates.

What You Can Do Next

1. Review your ATO debt and interest charges.
2. Speak with a finance broker to explore loan options.
3. Use finance to clear ATO debt and regain control.
4. Plan for future tax obligations within your cash flow.

Final Word

ATO payment plans may not be the cheapest option anymore.

With GIC rates high and about to lose their deductibility, financing your tax obligations could save you thousands.

BMG provides educational content only. Speak to a qualified finance professional for advice tailored to your situation.