Borrowing and restructuring solve different problems.

A legal process is not a loan product

Small business restructuring is a formal process for eligible companies under insolvency law. It involves a registered restructuring practitioner and legal conditions. It is not simply a request for lower loan repayments.

Refinancing replaces a debt with new lending. If the company is insolvent or viability is uncertain, directors should get insolvency and legal advice first. A lender’s willingness to discuss finance does not establish that the company should borrow.

Replace uncertainty with a practical next step

It is common to put off looking at a tax debt when the numbers feel overwhelming. Start by confirming what you owe, which obligations are overdue and whether any notice has a deadline.

An accountant can check the balance and lodgements. The ATO can discuss payment arrangements. A lawyer or insolvency practitioner may be needed if you face enforcement or solvency concerns. A finance adviser can help assess whether borrowing is realistic.

Borrowing is one option, not the only option

Depending on your situation, you may consider paying from business funds, an ATO payment arrangement, eligible remission requests or external finance. Debt reduction, approval and enforcement outcomes are not guaranteed.

If a notice is involved, seek appropriate advice now. Do not wait until you have assembled every document before asking what the deadline means.

Eligibility for restructuring is a professional assessment

A registered restructuring practitioner should explain the legal eligibility, process and obligations. A lender or finance website cannot establish eligibility merely from the amount of tax debt.

Ask how each proposed pathway affects creditors, director responsibilities and ongoing trading. Refinancing requires repayment of a new facility; restructuring is a formal insolvency-law process with its own conditions.

Two very different tools that owners sometimes confuse

Small Business Restructuring (SBR) and refinancing an ATO debt sound similar — both can result in a changed repayment position — but they are fundamentally different tools. SBR is a formal insolvency process under the Corporations Act, available only to eligible companies, run with a registered restructuring practitioner, that can compromise debts owed to creditors including the ATO. Refinancing is simply replacing an existing debt with new finance; it does not involve insolvency law, a practitioner, or any compromise of the amount owed — you still owe the full debt, just to a different party on different terms.

Choosing between them, or working out whether either is appropriate, is not something to self-assess. It depends heavily on whether the company is actually insolvent or at serious risk of insolvency, which is a legal and financial question that needs professional input.

What Small Business Restructuring actually involves

SBR allows an eligible small company, working with a registered SBR practitioner, to propose a restructuring plan to creditors — potentially including the ATO — while the directors generally remain in control of the business during the process. If creditors accept the plan, the company pays an agreed amount, often less than the full debt, over an agreed period, and the directors continue running the business subject to the plan’s terms.

Eligibility, process requirements and creditor voting rules are set by law and are not something this article can summarise as a checklist for your business — a registered SBR practitioner needs to assess whether a company actually qualifies and whether SBR is the appropriate path compared with other insolvency options such as voluntary administration or liquidation.

What refinancing actually involves

Refinancing an ATO debt means obtaining a loan — secured or unsecured, subject to lender assessment — and using it to pay out the ATO balance, replacing the ATO debt with a new commercial loan. This does not reduce the amount owed; it changes the creditor, the interest rate, the term and the repayment structure. It can make sense where the business is fundamentally viable but needs a different repayment schedule, a lower effective rate than continuing GIC, or simply wants to stop ATO recovery action by clearing the ATO balance directly.

Refinancing is not appropriate for a company that is insolvent or where the underlying debt level is beyond what the business can realistically service even on new terms — taking on fresh secured or guaranteed debt in that situation can make a difficult position worse, not better.

A hypothetical illustrating when each path might be considered

This is a hypothetical scenario only, not advice on your situation. Imagine a company with a genuinely viable core business and manageable overall debt, but an ATO balance that has grown due to a temporary cash-flow gap; here, refinancing that ATO balance into a structured loan, alongside tighter cash-flow management, might be one option considered after advice. Now imagine a different company where total liabilities (not just the ATO debt) significantly exceed what the business could ever realistically repay from trading, and the company may be insolvent; here, a registered practitioner may instead assess whether SBR, voluntary administration or another insolvency pathway is appropriate, rather than taking on more debt through refinancing.

These are illustrative contrasts only — determining which situation a real company is in requires a proper financial assessment, not a quick read of an article.

Checklist before choosing a direction

• Get an honest assessment of solvency from your accountant before considering either path.
• If insolvency is a possibility, speak to a registered liquidator or restructuring practitioner before taking on new finance.
• If the business is viable, compare refinancing costs against continuing ATO interest and any recovery risk.
• Understand that SBR affects creditors generally and has formal legal process requirements — it is not a quick fix.
• Keep your accountant and any insolvency adviser in the loop with each other, not working from different information.

Common mistakes

A common mistake is approaching a lender for refinancing when the real underlying issue is company insolvency — a loan does not fix an insolvent balance sheet, and taking on more secured or guaranteed debt in that situation can increase personal risk for directors. Another mistake is assuming SBR is available to any struggling business; eligibility criteria and the formal process mean it is not a universal solution and requires a registered practitioner’s assessment.

A third mistake is delaying the solvency conversation altogether because it feels confronting. Directors have specific duties regarding insolvent trading, and getting professional advice early generally preserves more options than waiting until creditors or the ATO take action.

Questions owners ask

Can I do SBR myself without a practitioner? No — a registered SBR practitioner must be appointed to run the process; it is not a do-it-yourself negotiation with creditors.

Does refinancing stop the ATO from pursuing a debt? Paying out the ATO balance with loan proceeds generally resolves that specific ATO debt, but it does not retrospectively address separate issues such as a director penalty notice already issued — those need their own legal advice.

If my company goes through SBR, do I personally remain liable for anything? Director liability depends on the specific liabilities involved and the legal framework — for example, obligations under the director penalty regime are a separate question from the company’s SBR plan, so get specific legal advice on your personal exposure.

How do I know if my business is actually insolvent rather than just under pressure? This is a legal and financial test, not a feeling — ask your accountant or a registered liquidator to assess cash flow, assets and liabilities properly rather than guessing.

Warning signs it is time to get formal advice now, not later

Certain signs tend to indicate that a business should seek registered insolvency or restructuring advice promptly, rather than continuing to manage the ATO debt informally. These include being unable to pay employee superannuation or PAYG withholding as they fall due, using new borrowing to meet old debts, relying on personal funds or director loans to keep the business trading, or facing legal recovery action from the ATO or other creditors.

None of these signs alone proves insolvency, but together they are the kind of pattern that a registered liquidator or restructuring practitioner is best placed to assess properly. Acting earlier generally preserves more options, including eligibility for processes like Small Business Restructuring, than waiting until a creditor forces the issue.

Industry factors that can affect the right path

Capital-intensive industries such as construction or manufacturing may carry secured debt over equipment or property, which affects how a restructuring plan or refinancing option can realistically be structured, since existing security interests need to be accounted for. Service-based businesses with fewer physical assets may have more flexibility in restructuring but can also find it harder to secure asset-backed finance, which affects whether refinancing is a realistic alternative to formal restructuring at all.

A registered practitioner or lender assessing your situation will look at these factors directly, but understanding how your industry’s typical asset and debt structure affects the options can help you ask better questions.

Working with your accountant before approaching either path

Your accountant is usually the right first call, because they can give an initial view on solvency using your actual financial position and help you decide whether the next step should be a conversation with a lender about refinancing or a referral to a registered liquidator or restructuring practitioner about formal options. Bring recent financial statements, a list of all liabilities (not just the ATO debt), and an honest summary of cash flow so the advice is grounded in your real numbers.

How finance options fit alongside this decision

If, after proper advice, the business is viable and simply needs a different repayment structure for its ATO debt, refinancing may be worth exploring, with a full written quote covering rate, fees and security requirements compared against the real cost of continuing GIC. If solvency is genuinely in question, pursuing new finance before getting insolvency advice can increase risk rather than reduce it, so the order of these conversations matters as much as the content of them.

Describe the circumstances with a clear timeline

Record when the difficulty began, what changed and how it affected payment. Illness, interrupted trading, a major customer failure or another event may need different supporting evidence. Provide accurate details and avoid presenting a generic hardship story as your own. Your accountant can help connect the events to the relevant liabilities and periods.

Separate a temporary interruption from an ongoing shortfall. Identify essential costs, current income and what payment capacity realistically exists. A repayment proposal based on hoped-for sales can worsen distress if those sales do not arrive. Ask what assistance is available for your taxpayer type and debt rather than assuming every form of relief applies to a company.

Do not confuse remission with release of the principal

Interest remission concerns a charge on the debt; it does not necessarily reduce the underlying tax liability. Hardship release operates under separate legal rules. A decision not to pursue a debt is not necessarily the same as extinguishing it. Confirm precisely what is being requested, what remains payable and the effect of any decision.

Keep dealing with the payment position while a request is considered. Neither a request for relief nor a pending lending application should be assumed to stop recovery action. If a legal notice has arrived, have a lawyer confirm the deadline independently from any discussions about assistance.

Choose support that fits the underlying problem

A viable business with a short-term funding gap faces a different decision from a company unable to pay debts as they fall due. Formal restructuring involves legal eligibility and a registered practitioner; refinancing involves a new loan contract. One cannot be substituted for the other simply because the monthly payment looks more manageable.

Ask your accountant and appropriately qualified advisers to explain the options and consequences. ASBFEO’s debt support resources include pathways to independent help. If financial pressure is affecting your wellbeing, seek personal support as well as financial guidance. You do not need to sign a loan contract to begin asking for assistance.