ATO Debt Calculator

An ATO balance does not sit still. This tool takes the balance you enter, applies a daily compounding charge to it, and shows you what the debt looks like in three months, six months and twelve if nothing changes. Alongside it sits the repayment on a loan of the same size, so you can see the two costs next to each other.

The comparison this page is really making

• What the tax debt costs you to leave where it is, month after month.
• What the same amount costs as a loan, at a rate you enter, over a term you choose.
• The gap between the two, which is the whole reason people refinance tax debt in the first place.

The gap is usually the point. Statutory interest on an overdue tax debt is set to encourage payment, not to be a competitive borrowing rate. Moving that balance onto a loan secured against property is often the difference between a debt that grows and a debt that reduces.

The general interest charge is not an annual fee added at the end of the year. It is calculated daily on the outstanding balance, and each day's charge is added to the balance the next day's charge is worked out on. That is what compounding means, and across a year it makes a real difference to the total.

The rate is set by the ATO each quarter. It is published, it moves, and it has moved a long way in both directions over the years. Whatever rate this tool starts from is an assumption we have to make so the arithmetic has something to work with. It is not the ATO's current figure and should not be treated as one. Check the current quarter's rate on the ATO's own website, or ask your registered tax agent, before you rely on any projection here.

Entering a payment plan does not, on its own, stop the charge. In most cases it continues to accrue on whatever balance remains. That is why a plan sized to what you can afford rather than to what the debt costs can run for a long time without the balance moving much, which is a demoralising place to be and a common reason people call us.

Remission of the general interest charge can be requested in some circumstances. Whether yours qualify is a matter for the ATO and for your registered tax agent. WeL’nd does not make remission applications, does not negotiate debt waivers with the ATO, and does not advise on tax.

• The charge rate is held constant across the projection. In reality the ATO resets it every quarter.
• The balance you entered is your whole balance on day one, across every account.
• No new liability falls due during the projection. The next BAS, the next instalment and the next superannuation obligation are not in the figure unless you add them.
• Payments are applied on the dates you nominate, in full.
• No remission is assumed, because none is guaranteed.
• The comparison loan is a plain principal-and-interest facility at the rate and term you entered, with no fees.

The second and third assumptions matter most in practice. Most businesses carrying tax debt are also still trading, which means new obligations keep arriving. A projection on a static balance is a floor, not a ceiling.

The ATO is a creditor with powers ordinary creditors do not have. It can issue garnishee notices to your bank or your debtors. It can issue director penalty notices that move a company liability onto a director personally. It can support a winding-up application. These are legal processes with short timeframes attached.

If you have received a director penalty notice or a statutory demand, the clock is already running and the first calls are your accountant and, where the situation warrants it, a solicitor. Finance can answer some of those situations, but only when it is arranged in time. Do not wait for the next notice before you start.

A lender reads the same balance differently. Tax debt tells them something about the business, and what it tells them varies. Sometimes it reflects a bad trading period that has since turned. Sometimes it means ATO money has been used as working capital, which is a harder conversation. Some mainstream lenders will not proceed while a tax debt is outstanding at all. Others will fund the payout of the debt at settlement, which is usually the cleaner structure because the debt is gone the day the loan lands.

What a lender will want to see

• Lodgements up to date, or a clear and dated plan to bring them up to date.
• An ATO integrated client account statement showing the running balance and the payment history.
• Evidence the business is trading: recent BAS, bank statements, an aged debtors listing.
• The security on offer, and enough equity in it once the existing debt is counted.
• A plausible explanation of how the debt arose and what has changed since.

Lodgements matter more than most people expect. A lender can work with a debt it can see and size. It cannot work with one nobody has quantified yet. If you are behind on lodgements, that is the first job, and it belongs with your registered tax agent.

1. 01

   Get the real balance

   Pull the integrated client account from the ATO portal or ask your tax agent for it. Work from that figure, not from the last letter that arrived.

2. 02

   Bring lodgements current

   Outstanding returns and BAS keep the debt undefined and keep lenders out. Your tax agent does this part.

3. 03

   Establish what security exists

   Residential or commercial property, held personally or through a trust or company. Equity, not just value, is what a lender lends against.

4. 04

   Move before the notices do

   Options narrow as recovery action escalates. A file with a payment plan being met is easier to place than one with a garnishee already issued.

We deal with the lenders. You deal with running the business. If you want a straight read on whether a refinance is realistic in your situation, call us and we will tell you what we see.