Business owners · ATO debt Can I get a home loan with ATO debt?
Yes, often. A tax debt doesn’t rule you out of a home loan, but it changes which lenders fit and what they’ll ask for. What matters is the size of the debt, whether it’s under a payment plan, whether your lodgements are up to date, and how much equity you have.
Key takeaways
- Lenders treat ATO debt as a liability. Most want lodgements up to date and the debt under a plan, or paid out at settlement.
- The ATO may report business tax debt to credit bureaus once $100,000 or more is over 90 days overdue and you aren’t engaging with it.
- The ATO’s general interest charge is 11.51% a year for October to December 2026, and it hasn’t been tax deductible since 1 July 2025.
- Refinancing it into a home loan lowers the repayment, but over 25 years it can cost far more in total. The table below shows both sides.
How lenders see ATO debt
To a lender, ATO debt is a debt like any other, with two differences. It often comes with a business that’s been under pressure, and it can hide more debt if returns haven’t been lodged. So lenders check three things before anything else:
- Are your lodgements up to date? Unlodged returns and BAS are the first thing most lenders will ask about.
- Is the debt under an arrangement? A payment plan you’ve kept to reads very differently from a debt the ATO is chasing.
- Is the business still trading well? A good business with a historical tax debt is a different file from a business using the house to stay afloat.
If the answer to all three is yes, there are usually options. If one is no, the first step is usually with your accountant, not a lender.
Payment plan, pay it out, or refinance? The true cost of each
$80,000 of ATO debt, three ways. Every option shows the rate, the term, the total interest and what you’d secure it against.
| Keep the ATO payment plan | Refinance over 25 years | Refinance, keep paying the same | |
|---|---|---|---|
| Rate | 11.51% GIC, changes quarterly | 7.49% example home loan rate | 7.49% example home loan rate |
| Repayment | $3,748 a month | $591 a month | $3,748 a month |
| Cleared in | 2 years | 25 years | About 23 months |
| Total interest | About $9,942 | About $97,202 | About $6,123 |
| Secured against | Nothing | Your home | Your home |
| Costs to switch | None | Lender, valuation and government fees, and any discharge or break costs | The same as refinancing over 25 years |
| Pay it off sooner? | Yes, any time | Usually, on a variable rate | That’s the plan |
Illustrative only, not a quote, an offer or a comparison rate. GIC compounds daily; the plan is shown as monthly repayments at 11.51% a year for simplicity. The example home loan rate is not a rate any lender has offered you. Excludes fees, which reduce any saving. Refinancing unsecured or tax debt into a home loan secures it against your home.
What the table says
Stretched over 25 years, the repayment drops from $3,748 to $591 a month, and the total interest rises from about $9,942 to about $97,202. That’s why I never sell this as swapping an 11% debt for a 7% one.
Kept at the same repayment, refinancing saves about $3,800 of interest before costs, and the costs of switching can take much of that. So the case for refinancing is rarely the rate.
When refinancing it can still make sense
- The payment plan repayment is squeezing the business’s cash flow, and a lower repayment for a while would fix that.
- The debt is heading for the credit bureaus, and clearing it would protect your credit file.
- You’re buying or refinancing anyway, and clearing the debt at settlement keeps it simple.
Even then, the plan is to keep paying more than the minimum, so it’s cleared in years, not decades.
Does ATO debt show on my credit file?
Not automatically. Under the ATO’s rules, it may report a business’s tax debt to credit reporting bureaus when all of these apply:
- The business has an ABN and isn’t an excluded entity, such as a registered charity.
- It owes at least $100,000 of tax debt that is more than 90 days overdue.
- It isn’t effectively engaging with the ATO to manage the debt.
A payment plan you’re keeping to counts as engaging. Before reporting, the ATO sends a notice of intent, which gives 28 days to pay or set up an arrangement. Once a debt is reported, every lender who checks your file will see it.
Paying it out at settlement
If you’re buying a home or refinancing anyway, some lenders will pay the ATO directly from the new loan at settlement. That clears the debt and the payment plan in one step. You need enough equity, or deposit, to cover it, and the lender will count the larger loan when it works out what you can afford.
Buying a home with ATO debt under a payment plan
If you’re buying rather than refinancing, many lenders count your payment plan repayment as a monthly commitment, the same as a car loan. A large repayment can reduce what you could borrow. Some lenders want the debt cleared before or at settlement instead.
Either way, lenders want evidence: your payment plan letter, a history of payments made on time, and your ATO statement.
When it’s the wrong move
- The business is still running at a loss, and the debt is still growing. A loan won’t fix that.
- Lodgements are behind. Get them current first.
- The payment plan is affordable, and refinancing would only add costs.
- The debt is small enough that switching costs outweigh the benefit.
If one of these is you, I’ll say so. The ATO’s own guidance for businesses that can’t pay on time is to talk to a registered tax professional about the options, and that’s where to start.
Your accountant keeps the tax advice. I keep the credit
I’m a Chartered Accountant (FCA, ICAEW), but I don’t give tax advice on this page or in a session. Your accountant decides how the debt is managed with the ATO, and whether the interest or the structure changes anything for your tax.
My job is the lending: which lenders accept ATO debt in your situation, whether they’ll take a payment plan or want it cleared, what you could borrow either way, and the true cost of each option. If your accountant wants to be part of that conversation, even better. Accountants can refer a client here.
FAQ Questions clients ask
Can I get a home loan with ATO debt?
Yes, with some lenders. Lenders treat ATO debt as a liability. Most want your lodgements up to date and the debt either under a payment plan you’re keeping to, or paid out from the new loan at settlement. Which option fits depends on the amount, your equity and the lender.
Can I get a home loan while on an ATO payment plan?
Often, yes. Many lenders accept an ATO payment plan if it’s current and you’ve kept to it, and count the repayments when they work out what you could borrow. Some lenders want the debt cleared at settlement instead.
Does ATO debt show on my credit file?
Only in some cases. The ATO may report a business tax debt to credit reporting bureaus if the business has an ABN, owes at least $100,000 that is more than 90 days overdue, and isn’t engaging with the ATO to manage it. A payment plan you’re keeping to counts as engaging.
Is it a good idea to pay off ATO debt with my home loan?
Sometimes, and sometimes not. Refinancing can lower the monthly repayment, but stretched over 25 years it can cost far more in total interest, and the debt becomes secured against your home. It tends to make sense when it fixes cash flow or clears a debt that would otherwise be reported, and you keep paying it down.
What interest does the ATO charge on unpaid tax?
The general interest charge, which compounds daily. For October to December 2026 it is 11.51% a year. From 1 July 2025, interest charged by the ATO is no longer tax deductible. Ask your accountant what that means for your business.
Can I refinance if my tax returns aren’t lodged?
It’s much harder. Most lenders want lodgements up to date before they’ll look at an ATO debt, because unlodged returns can hide more debt. Getting lodgements current is usually the first step, and it’s one for your accountant.
Will the lender contact the ATO?
Lenders usually ask you for your ATO statement or portal records, and your payment plan letter, rather than contacting the ATO themselves. They may also check your credit file and the ATO’s business debt disclosures through the credit bureaus.
Read next
Get your real number in one 30-minute session.
Then set a pace you can live with.
Book 30 minutes and see every option side by side, with the true cost of each.