ATO Debt Just Got More Expensive

Picture this: You're running a successful SME business in Brisbane. Last financial year was your best yet, so good that come July, you're staring down a $40,000 tax bill you weren't quite prepared for.

In the past, you might have set up a payment plan with the ATO, knowing that at least the interest would be tax deductible. But unfortunately, that safety net just disappeared.

From 1 July 2025, the ATO changed the rules. Interest on tax debt is no longer tax deductible. And with ATO interest sitting at a brutal 10.78%, this change is hitting business owners hard in the pocket.

 If we break this down with real numbers, here’s what this means:

That's an extra $1,304 coming straight out of your pocket – money that could be spent on new equipment, staff wages, or simply keeping the lights on.

 But it’s about more than the money:

Banks and lenders view ATO debt very differently to business loans. When you apply for a mortgage, equipment finance, or business loan down the track, outstanding tax debt raises red flags. It suggests cash flow problems and poor financial management – even when that's not the case.

We all know that having the ATO breathing down your neck is stressful. Being kept awake at night, worrying about when they might take more aggressive action is the kind of mental load that affects your ability to focus on running and growing your business.

ATO payment plans aren't exactly known for their flexibility. Miss a payment and you're back to square one, often with additional penalties. There's no room for the natural ups and downs of business cash flow.

Business loans typically offer longer repayment terms than ATO payment plans. Instead of aggressive monthly payments that strain your cash flow, you can structure repayments that work with your business cycle.

Banks view business loans as normal business operations. When you apply for future financing, a well-managed business loan actually demonstrates good financial planning rather than raising concerns.

Perhaps most importantly, you get the ATO off your back. No more threatening letters or compliance reviews triggered by outstanding debt. You can focus on growing your business instead of managing ATO stress.

The interest on your business loan is fully tax deductible, giving you back that financial benefit the ATO took away.

Not all business loans are created equal. When refinancing ATO debt, you want:

• Competitive interest rates
• Flexible repayment terms that match your cash flow
• No early repayment penalties so you can pay it off faster when cash flow improves
• Quick approval process to get the ATO sorted fast
• Lenders who understand business tax debt refinancing

We've been helping business owners navigate these exact situations for years. We understand that tax debt doesn't mean you're a bad business owner; often, it means you've had a good year and weren't quite prepared for the tax implications.

Our approach is simple: we look at your business holistically, not just the debt you're carrying. We work with lenders who understand business cash flow cycles and can structure solutions that actually help your business thrive.

Most importantly, we can often settle your ATO debt directly, getting them off your back while you focus on what you do best.

With ATO interest rates still high and no tax relief available, carrying tax debt has never been more expensive. But interest rates on business loans are still competitive, and the tax benefits make them even more attractive.

The business owners who act now are the ones who'll be ahead of the game. They're turning an expensive problem into a strategic business decision.

If you're carrying ATO debt and want to see how the numbers stack up for your situation, we're here to help. We'll run a quick comparison showing you exactly what you could save.

Because at the end of the day, your energy should be spent growing your business, not managing tax debt stress.