Is your ATO payment plan squeezing the life out of cash flow? Refinancing could change the picture.

A payment arrangement should work for your business, too

Making the ATO instalment can be difficult when customers pay late or trading slows. Refinancing means borrowing to settle the outstanding ATO balance and moving to a lender’s repayment schedule.

A different repayment term may improve short-term cash flow, but extending the term can increase the total cost. A fixed rate can offer certainty; a variable rate can change. Neither is automatically cheaper than an ATO payment plan.

Compare like with like

Start with your current ATO statement and payment schedule. Compare the same opening debt and include all fees. The ATO general interest charge can continue to accrue on unpaid amounts during a payment plan. Rates change quarterly, so an estimate is not a guarantee of future cost.

• Calculate the total loan cost, not just the advertised interest rate.
• Ask what happens if you repay early or miss an instalment.
• Allow for new BAS and income tax obligations.
• Do not stop paying your existing plan without agreeing the next step with the ATO.

Who refinancing an ATO payment plan tends to suit

Refinancing can suit a business whose ATO instalments were set at a level that no longer matches current cash flow — perhaps trading has slowed, a large customer invoice is overdue, or seasonal income has shifted since the plan was agreed. If a different repayment structure would genuinely ease pressure without extending the debt unreasonably, it is worth exploring with a broker who can show you the real trade-offs.

It is less likely to suit a business where the instalments are manageable and the plan is working, or where the underlying trading position cannot support any repayment at all. In the second case, refinancing simply swaps one unaffordable obligation for another, potentially on less flexible terms than the ATO itself offers. Speak with your accountant about whether the ATO might also vary the existing arrangement before looking at external finance.

Comparing total cost, not just the monthly figure

A lower monthly repayment can look appealing, but a longer term can mean more interest paid overall. Pull your current ATO payment schedule and the continuing general interest charge, which is no longer tax-deductible from 1 July 2025, and compare it against a lender’s total cost, including establishment and ongoing fees, over the full proposed term rather than just the first year.

Our [ATO GIC calculator](/ato-gic-calculator) can help estimate what staying on the current plan may cost over time, and our [rates and fees](/rates-and-fees) page explains the cost components a lender should disclose up front so you can compare like with like, rather than relying on a single advertised rate.

What lenders look at and what to prepare

Lenders assessing a refinance will typically want to see your current ATO payment plan terms, payment history on that plan, recent bank statements and an understanding of why a different structure is needed now, along with confidence that future BAS and tax obligations can still be met.

• Your ATO payment plan letter and statement of account.
• Evidence of instalments paid to date.
• Recent bank statements showing trading cash flow.
• A short explanation of the change in circumstances.

A hypothetical example

Hypothetical only: a retailer is on an ATO plan with instalments of $3,000 a month, but a slow trading quarter has made that unaffordable. Refinancing to a loan with illustrative repayments of $1,800 a month over a longer term could ease short-term pressure, but may cost more in total once fees and extra interest are added up. These numbers are illustrative only — a broker and accountant should confirm actual figures against your real ATO statement before any decision is made, including how the new repayment sits alongside the next BAS cycle.

How the process works with our specialist team

Our tax debt finance team is led by Kevin Knight, our Principal Finance Broker and an MFAA Accredited Finance Broker with over 20 years in Australian banking. We review refinance scenarios to check they actually improve your position rather than just deferring the pressure.

• Share your current ATO plan details and recent financials.
• Our team compares refinancing against staying on the existing plan.
• You see the total cost of each option side by side.
• If refinancing makes sense, an application proceeds to a suitable lender, subject to that lender’s approval, eligibility, terms and fees.

Common mistakes owners make

A frequent mistake is stopping ATO instalments before a replacement arrangement is actually in place, which can trigger default action and remove goodwill built up with the ATO. Another is focusing only on the lower monthly repayment without checking the total cost over the full term. Some owners also overlook that extending the term pushes the debt further into future BAS cycles, potentially compounding with new liabilities down the track. This is general information, not tax advice — confirm your specific position with your accountant before changing any existing arrangement.

Questions owners ask

Common questions when owners first consider refinancing an ATO arrangement.

• Can I refinance part of my ATO debt and keep the rest on a plan? This depends on the lender and your ATO arrangement — ask before assuming it is possible.
• What happens if I refinance and then miss a loan repayment? Consequences vary by lender and loan type — read your contract carefully.
• Is a longer term always worse? Not necessarily, but it usually means more interest paid overall.
• Should I talk to the ATO first? Often yes — they may be able to vary your existing plan without new finance.
• Will refinancing affect my relationship with the ATO going forward? It should not, provided the ATO debt is properly repaid, but confirm closure of the account with your accountant.

Keep exploring

Related pages that may help as you compare your options.