How do you refinance ATO debt?

ATO debt accrues General Interest Charge (GIC), which compounds daily. Left unpaid it grows, and the ATO can escalate through collection action. Refinancing swaps that open-ended charge for a facility with a fixed structure and a repayment you can plan around.

The process generally runs in four steps.

• Work out the exact debt: get your ATO integrated client account balance, including any amounts not yet due
• Assemble the file: financials, BAS and activity statements, bank statements and details of any security
• Match to lenders: only some lenders fund ATO positions, so a broker with a wide panel can narrow to those who will
• Settle: the lender pays the ATO directly and you repay the new facility

Lenders want evidence the business can service the new facility. That usually means up-to-date lodgements, a clear picture of why the debt arose and how it will not recur, and either solid cash flow or security such as property. Criteria vary widely across lenders, which is why the same file can be declined by one and approved by another.

You can ask the ATO for a payment plan. This can suit smaller or short-term debts, but GIC generally continues to accrue while the plan runs. Refinancing is worth comparing against a payment plan when the debt is large, the plan is at risk of lapsing, or you want one lender relationship instead of an ongoing ATO arrangement. Speak to your accountant about the tax treatment of any option.