The end of the financial year often reveals some uncomfortable truths—like a mounting tax debt that wasn’t quite on your radar. Whether you’re a small business owner hit with a surprise ATO bill or a growing company trying to juggle multiple obligations, tax debt can quickly impact cash flow, credit standing, and peace of mind. 

But you’re not alone—and you’re not out of options. At Capital Plus Finance, we help Australian businesses access tailored funding to manage and pay off tax debts, without crippling daily operations. Here’s how to take control of your finances and keep growing. 

Update: GIC Is No Longer Tax-Deductible 

One important recent change from the ATO: General Interest Charges (GIC) — the penalties applied to late tax payments — are no longer tax-deductible. 
 
What does this mean for your business? 
 
Previously, businesses could claim GIC as a deduction, softening the cost of falling behind on tax. That’s no longer the case. Now, any interest charged on overdue ATO payments is a full expense with no tax offset, making tax debt even more expensive to carry. 
 
If your business is accumulating GIC on overdue BAS, PAYG, or income tax liabilities, the financial pressure will compound faster—and with no tax relief. This makes it even more important to act early and proactively manage outstanding tax through structured finance options. 
 
A properly structured loan can clear the debt, stop the interest from piling up, and free your business from the cashflow squeeze. 

Why Tax Debt Happens—Even to Good Businesses 

Tax debt doesn’t always signal poor management. In fact, it’s more common than you’d think. Many SMEs find themselves in this position due to: 

• ATO payment plan defaults 

• Late or seasonal invoicing cycles 

• Poor bookkeeping or underestimating PAYG and GST liabilities 

• Cash flow challenges or one-off business expenses 

• Revenue growth without matching financial controls 

The ATO is now more proactive in recovering debt, and failure to resolve it can impact your ability to access future finance or government support. 

What Happens If You Ignore It? 

Ignoring a tax debt can lead to: 

• Default listing on your business credit file 

• Director Penalty Notices (DPNs) for unpaid PAYG or super 

• Garnishee notices sent to your bank accounts or debtors 

• Legal action by the ATO 

• Loss of supplier confidence or trade insurance coverage 

The good news? A strategic loan—structured properly—can resolve the issue quickly, protect your credit profile, and give you breathing room to reset your finances. 

Finance Options to Clear Tax Debt 

✅ Unsecured Business Loans 

These loans are fast to access and require no property security. You can receive funding in as little as 24–48 hours to pay off the ATO and avoid penalties. Great for: 

• Smaller debts (under $250K) 

• Businesses with strong turnover but temporary cash gaps 

• Those needing minimal documentation 

✅ Secured Business Loans 

If your debt is higher or you’re behind on other payments, a secured loan using business or personal assets (e.g. property) may offer lower rates and longer terms. 

✅ Second Mortgage or Caveat Loans 

For property owners, these allow you to release equity fast—even if a first mortgage is in place. Ideal when time is tight and credit is under pressure. 

Benefits of Using a Loan to Pay the ATO 

• Protects your credit file from default listings 

• Consolidates multiple debts into one manageable repayment 

• Removes ATO pressure so you can refocus on growth 

• Allows you to negotiate from strength (e.g. settlements, disputes) 

• May be tax deductible in some circumstances 

Note: Always check with your accountant about the deductibility of interest for tax debt funding. 

What You Need to Apply 

Even if you’ve had trouble with the ATO, funding is still possible. To improve your chances: 

• Gather recent financials and ATO notices 

• Be upfront about the debt amount and reason 

• Show how the loan will benefit the business and cash flow 

• Work with a broker who can present your case properly 

We Help All Kinds of Businesses 

Whether you’re in trades, hospitality, transport, construction, or professional services, we’ve helped dozens of clients wipe the slate clean and return to solid ground. Our panel of lenders includes flexible options for businesses with poor credit or tax arrears. 

Final Thought 

Tax debt can feel like a heavy weight—but it doesn’t have to hold you back. With the right funding and advice, you can take control, protect your business, and move forward with confidence into FY26. 

👉 Book a meeting  with the Capital Plus Finance team today