How lenders see a tax debt
- On a payment plan and up to date. Many lenders will accept it and count the repayments as a debt.
- Overdue with no plan. Most major lenders will decline until it's on a plan or paid.
- Reported to credit agencies. The ATO can report larger overdue business tax debts to credit reporting agencies, which affects your credit file.
- Recurring tax debts. Lenders look for a pattern. One-off debts from a big year are easier to explain than repeated ones.
Your options
- Set up a payment plan first. It shows the debt is under control, and it's often the first thing lenders ask about.
- Pay it from equity. Some lenders let you refinance and use equity in your home to pay the ATO, often at a much lower rate than the ATO's interest charge.
- Specialist lenders. Non-bank lenders are often more flexible with tax debts, at a higher rate, with a plan to move back to a standard lender later.
- Lodge everything. Up-to-date tax returns and BAS matter as much as the debt itself.
What to have ready
- Your ATO statement of account showing the balance
- Your payment plan details and evidence it's being paid
- Your latest tax returns and BAS, all lodged
- A short explanation of how the debt arose
Questions people ask
Can I get a home loan with an ATO debt?
Often yes, especially if it's on a payment plan that's up to date. Some lenders are much more flexible than others.
Can I refinance my home loan to pay off an ATO debt?
Some lenders allow it, using equity in your home. It can lower your interest costs, but it turns a short-term debt into a long-term one.
Does an ATO payment plan affect my borrowing power?
Yes. Lenders count the repayments as a debt, which reduces how much you can borrow.
Will an ATO debt show on my credit file?
Larger overdue business tax debts can be reported to credit agencies by the ATO. Smaller personal debts on a plan usually aren't.
