Can I get a loan to pay a tax bill?

A loan to pay tax bill may be approved for both individuals and business operators with unsecured credit products at competitive interest rates through Jade Finance. While ‘tax time’ is considered to be at the end of the financial year, 30 June – 1 July, crunch time for taxation can be early in the year when any income tax payable is due for payment. If you don’t pay on time, the Australian Taxation Office will charge you interest which compounds over time. Leading to an ever-increasing debt and the potential for financial issues.

Individuals that are employees will have their taxation deducted from wages and paid by their employer. But those that derive additional income from a rental property, gig work, investments, and other sources, may find themselves subject to additional taxation when their ATO assessment arrives. The date for personal tax payments is March. Businesses also face early year deadlines for their taxation commitments – both income tax and their quarterly or annual BAS.

After a tough year of rising inflation and high costs of living and coming fast after the festive season, that deadline to pay debts to the ATO may be very untimely. If the debt is not paid, not only is interest applicable but penalties may also apply. The options are to come to an arrangement with the ATO to pay off outstanding debts over time or take out a loan through a lender. We outline the finance products we have to assist individuals and businesses to pay their ATO debts and why finance may be an advantage over an ATO arrangement.

Personal Loan to Pay Tax Bill

For individuals with a personal income debt to the ATO, an Unsecured Personal Loan may be considered. This is a very versatile credit product which can be used to cover expenses which are not available or suitable as finance collateral.

The interest rate may be fixed or variable and terms negotiated by our brokers to best suit individual requirements. Short term loans may be secured to ensure the debt is finalised before the next ATO assessment is due.

To be eligible for a consumer credit product, applicants will need to be over the age of 18 years, have employment and income, and provide financial documentation and details or Australian residency and ID. Arranging finance to finalise ATO debts as early as possible before the due date may avoid penalties and a last minute panic as the deadline looms.

If planning to take on finance for another purpose this year – a new car, boat, or motorbike, finalising other debts may improve your financial position and credit profile and result in better rates and finance solutions.

Business Loan to Pay Tax Bill

Businesses with debts to the ATO can consider unsecured commercial credit facilities. The options include a Business Overdraft and an Unsecured Business Loan. An Overdraft is extremely versatile and allows the business to pay down the debt as cash flow permits. Terms may be set or the line of credit established on an ongoing basis which is reviewed at various time by our non-bank lenders.

Unsecured Business Loans are individually sourced and structured to best meet our client’s requirements. No collateral is required so there is no need to tie up assets as finance security. Terms can be negotiated and with our highly competitive rates, this credit product may present a very affordable solution. Interest charges and lender charges on both Overdrafts and Unsecured Business Loans are typically tax deductible.

Why take out a loan to pay tax bill?

Where individuals and businesses have a debt to the ATO, an arrangement to pay off the debt may be sought from the ATO. But interest will be charged and penalties may still apply. With our access to a large lender base and highly competitive rates, our rates will likely be much cheaper than what the ATO will charge you.

For businesses, there is another important reason - changes to ATO debts that came into effect on 1 July 2025. The change – interest charged on ATO debts is no longer a tax deduction. Prior to this date, businesses could deduct interest which made repaying ATO debts more workable. But with this benefit no longer an option, the interest charged by the ATO will need to be covered from the business profits. This applies to debts incurred from 1 July 2025.

The advantage of covering the ATO debt with commercial finance is that businesses will be allowed to deduct interest on business loans from taxable income. Depending on the size of the debt and the finance, this may represent a significant benefit compared with paying the interest from profit.

In addition, when entering an arrangement to repay debt directly to the ATO, the interest charged accrues and compounds over time. Interest on some ATO charges is applied on a daily basis. Making the actual interest rate being paid much greater than that quoted.

Sourcing finance for ATO debt through Jade at competitive rates and over a fixed term may present a much more affordable option for your business.

To discuss your options for a loan to pay tax bill, contact Jade Finance online or by phone. 

DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.