ATO debt loans for tradies exist because tax debts in the trades are common and they rarely arrive at a good time. You have a big quarter, the money goes straight back into materials and wages, and by the time BAS is due the cash isn’t there. A few quarters later the balance has grown, and so has the attention from the ATO. A business loan to pay the tax debt clears it in one go, so you can stop worrying about it and get back to work.
How do tradies end up with an ATO debt?
It’s rarely because someone’s being careless. More often it’s the nature of trade work:
- GST collected but spent. A big invoice comes in, the GST sits in the business account, and it gets used for materials before BAS is due.
- PAYG withholding falls behind when wages are prioritised over tax during a tight month.
- A strong year followed by a slow one. Income tax is calculated on the good year and due in the lean one.
- Late paying builders. You’ve invoiced, you owe the GST, but you haven’t been paid yet.
- A one off event like a dispute, an injury or a job that went badly.
Whatever caused it, the fix is about timing: getting the money to clear the debt now and repaying it on terms that work for the business.
Why do tradies clear tax debts with a loan?
Every business is different, and your accountant is the right person to talk to about your tax position. That said, these are the reasons tradies commonly give for paying the ATO out with a loan:
- One clear repayment with a known term, instead of an open ended debt
- Stopping the pressure of letters, calls and potential garnishee notices
- Freeing up the business account so wages and suppliers can be paid normally
- Keeping future work flowing, since some builders and head contractors check a subbie’s standing
- Peace of mind, which is hard to put a price on
Key facts
- Loan size: from $20,000; property secured loans up to $5 million
- Security: property you or a guarantor own (home, investment, commercial or land), or unsecured for businesses trading 6+ months
- Speed: some unsecured loans within hours; property loans as little as 24 hours in some cases
- Term: property secured loans typically 1 to 12 months
- Paperwork: no financials for property secured loans; bank statements for unsecured
- Credit: bad credit considered on property secured loans
- Purpose: business purposes, including tax and BAS debts
Secured or unsecured for an ATO debt?
Unsecured. If your business has traded for six months or more with an ABN and has steady income, an unsecured cash flow loan may clear the debt. It’s sized to turnover and assessed on your business bank statements. This suits smaller or medium tax debts where speed matters most. See cash flow loans for tradies.
Property secured. For larger debts, or when turnover isn’t enough to support an unsecured loan, a loan secured against property you own is usually the answer. Most tradies use a fast second mortgage over their home or an investment property, which leaves their existing home loan untouched. Bad credit is considered, and no financials are needed.
Examples of ATO debt loans
These are illustrative examples only.
Example: the $100,000 tax bill. A carpentry business with four staff has built up around $100,000 in combined BAS and income tax debt over 18 months. The business has traded for six years and has healthy turnover. An unsecured loan sized to that turnover pays the ATO in full, and the business repays it over the following months.
Example: the bigger debt with property behind it. A small building company owes a much larger amount across GST, PAYG and income tax, plus two expensive business credit cards. The directors own an investment property with good equity. A second mortgage clears the ATO and the cards together. This kind of approach is covered on our debt consolidation page.
What to have ready
- Your most recent ATO statement of account showing the balance owing
- Your ABN and business details
- For unsecured loans: recent business bank statements
- For property loans: the property address, who’s on title and any existing loan balance
- A short explanation of how the debt built up and how you’ll repay the loan
Being open about how the debt happened helps. Lenders see tax debts all the time. What they want to know is that the business is sound and the loan will be repaid.
Common mistakes with tax debts
- Waiting for it to go away. Tax debts tend to grow over time. The earlier you deal with it, the more options you usually have.
- Borrowing only for the arrears. If the next BAS is due soon, factor it in so you’re not back in the same spot next quarter.
- Not talking to your accountant. A good accountant can help you set things up so the debt doesn’t come back.
- Using personal credit cards to chip away at it. That’s often the most expensive way to pay a tax debt.
Our guide on how to pay an ATO debt fast goes into more detail.
What does it cost?
Every loan is priced on your circumstances. We don’t publish rate cards. We find the sharpest rate available for your situation and show you the full cost before you commit.
Ready to get the ATO off your back? Start your application. It takes about 60 seconds, won’t affect your credit score, and a lending specialist will call you back to go through your options.
