ATO Debt Strategies for Accountants

As Australia’s tax debt climbs past $76 billion, the pressure on SMEs is intensifying – and the ATO is tightening its grip. One-third of this debt is owed by just 42,000 businesses, many now finding ATO payment plans harder to secure, more expensive, and increasingly restrictive.

Current State of ATO Collections

While ATO arrangements may feel like the default fix, they often come with hidden costs, rigid terms, and long-term consequences that can limit your client’s access to mainstream finance.

The Real Cost of ATO Payment Plans

The ATO’s General Interest Charge (GIC) currently sits at 11.36% – and from 1 July 2025, this interest will no longer be tax deductible.

That means:

And if client’s ATO interest show up in the P&L, banks may red-flag future borrowing.

Beyond the ATO Plan:
10 Funding Strategies Accountants Are Using Right Now

At MKP, we work with over 200 accounting firms nationally to provide smarter, lender-backed funding options that help clients tackle ATO debt without locking into inflexible terms or damaging future access to capital..

1. Reamortise Existing Equipment Loans

Stretch the term, ease the pressure

Extending client's loan over longer term can significantly reduce monthly repayments and free up working capital without taking on new debt.

2. Raise Capital Against Unencumbered Equipment

Turn idle equity into working capital

Fully owned equipment – trucks, cars, earthmoving machinery – can be used to unlock fast capital. Unlike property-backed loans, this strategy doesn’t risk the family home. It’s often overlooked but highly effective in asset-rich industries.

3. Refinance Commercial or Residential Property

Reset the terms, release equity, regain flexibility

Clients with built-up equity in their business premises or investment property can refinance to lower their repayments or consolidate multiple facilities. This strategy works well when the goal is to reduce outgoings without selling assets.

4. Equity Release on Property

Access funds without touching the mortgage structure

Rather than refinancing an existing mortgage, clients can release standalone capital against property equity through second-tier lenders. This keeps the original terms intact while unlocking new funding.

5. Fleet Refresh Using Asset Finance

Sell old gear, finance new – and redirect the cash

Clients with older vehicles or machinery may be able to sell those assets and finance newer ones. This creates an injection of working capital that can be used to reduce tax debt or boost operational capacity.

6. Insurance Premium Funding

Free up cash by spreading large annual bills

Rather than paying insurance premiums upfront, clients can spread the cost over 10–12 months. This smooths cash flow, particularly during tax season, and ensures critical cover stays in place.

7. Unsecured Overdraft

Quick access to capital – no property required

Flexible cash flow support, often with same-week approval with no need for property security.

8. Secured Overdraft

Lower rates, higher limits – backed by business assets

Secured overdrafts require collateral (e.g. GSA or equipment), but offer better terms and higher limits than unsecured options. These work well when the business needs a buffer but wants to avoid fixed loan repayments.

9. Flexible Term Loans (Non-Property Backed)

Medium-term funding without using the family home

These loans are secured via General Security Agreements (GSAs), not property. They provide a longer repayment horizon (12–60 months) without requiring real estate as collateral – making them more accessible and lower risk for many SMEs.

10. Trade Finance

Support stock or supplier payments while preserving cash

Trade finance allows clients to fund supplier invoices and inventory purchases without dipping into working capital. It’s an excellent option for importers, wholesalers, and businesses with lumpy payment cycles.