Can I use a business loan to pay a BAS or tax bill?

Why do so many businesses end up short at BAS time?

Because the GST and PAYG withholding on a BAS aren’t really the business’s money — they’re collected on behalf of the ATO — but they sit in the same account as everything else. In a strong quarter, it’s easy to spend them on stock, wages or a new van, expecting the next quarter to cover the bill. Then a big customer pays late, or winter is slower than expected, and the bill lands with not enough in the account.

It’s common, fixable and nothing to be embarrassed about. The key is dealing with it before it compounds.

What are my options when a tax bill is due?

Option	How it works	Watch out for
Pay from cash reserves	Simplest, if the money is there	Leaving too little buffer for wages and suppliers
ATO payment plan	Instalments agreed with the ATO; online for debts of $200,000 or less	General interest charge keeps accruing and isn’t deductible from 1 July 2025
Unsecured business loan	Lump sum, repaid over months	Repayment size; typically $5,000 – $500,000
Line of credit	Draw for the bill, repay as cash comes in	Discipline to clear it before the next BAS
Property-secured loan	Larger amounts, longer terms, $20,000 – $5,000,000	Property at risk; valuation and legal steps

There’s no one right answer. A payment plan suits some businesses well; for others, a loan is cheaper, calmer or simply the only option that fits.

How does the ATO’s interest charge change the maths?

The ATO charges general interest charge (GIC) on overdue amounts, calculated on a daily compounding basis. From 1 July 2025, ATO interest charges are no longer tax deductible, which means they cost more in real terms than they used to.

That doesn’t automatically make a loan cheaper — loans have costs too. But it does mean the comparison is worth doing properly, in dollars, over the period you’ll carry the debt. Our explainer on what a business loan costs shows how.

When does a loan make more sense than a payment plan?

A loan is often the better choice when:

• The plan’s instalments don’t fit cash flow, and you’re at risk of defaulting on it.
• The debt is large and growing, with the risk of being reported to credit bureaus. The ATO says it may disclose business tax debts of $100,000 or more overdue by more than 90 days if you’re not engaging.
• You need a clean slate before selling, refinancing or tendering for work.
• Several tax periods have stacked up, and one loan can clear them all.
• Property security is available, allowing a longer term with smaller repayments.

A plan is often better when the debt is small, the instalments are comfortable and the business will clear it quickly. For the lender’s-eye view of tax debt, read business loans with ATO debt.

What do lenders need for a tax-bill loan?

• The ATO statement of account or BAS notice, showing the exact amount.
• Lodgement status — ideally all BAS and returns lodged.
• Business bank statements, six to twelve months.
• Details of any payment plan and how it’s been kept.
• Property details, if it’s a property-secured loan.

Funds can often be paid straight to the ATO, so the debt is cleared on the day the loan funds. If you want to see which route fits your bill, send a quick enquiry — there’s no credit check when you first enquire.

How does a BAS loan fit together? (Illustrative example)

Illustrative only — invented business, simplified figures.

A Melbourne electrical wholesaler’s October BAS shows $94,000 owing, mostly GST from a strong September. A large customer has just moved to sixty-day terms, so the cash won’t be there until December.

• Option 1: ATO payment plan over twelve months. Comfortable instalments, but GIC accrues on the balance and isn’t deductible.
• Option 2: A short unsecured loan, repaid over six months as the customer’s larger payments arrive.
• Option 3: A line of credit drawn for the BAS and cleared in December.

Given the customer pays in December, a short facility that’s cleared quickly may cost less overall than a year-long plan. The owner compares all three in dollars before choosing.

How can I avoid the next BAS surprise?

• Move GST and PAYG withholding into a separate account each time you’re paid.
• Forecast the BAS a month before each due date — 28 October, 28 February, 28 April and 28 July for quarterly lodgers.
• Set up a line of credit in a calm period as a buffer, rather than scrambling at the deadline.
• Lodge on time even if you can’t pay, and talk to the ATO or a lender early.

For the wider picture, the guide EOFY business finance questions covers the June quarter and the start of the new year.

Clear the tax bill, keep the business moving

We see tax bills every day and treat them as a normal business problem. Enquiring doesn’t involve a credit check, your details aren’t sold on to a queue of lenders, and a real person compares a loan with your ATO options so you choose the cheapest, calmest path. Please be accurate on the form about the amount owed and whether you’re on a plan — that’s how we match the right option first time.

Talk to us about your tax bill →