ATO tax debt: From 1 July 2025, a quiet but costly change for SMEs will take effect: interest charged by the ATO on overdue debts will no longer be tax deductible.
From 1 July 2025, small businesses will no longer be able to claim tax deductions on interest charged by the ATO for unpaid tax debts.
There are two types of interest the ATO applies when businesses pay late or underpay their tax. Until now, these charges were tax-deductible. Soon, they’ll become a straight up cost.
And for businesses already dealing with ATO debt, that cost could be significant.
For businesses trying to manage tight margins and rebuild momentum, this is a shift that makes holding tax debt even more expensive. It’s a timely reminder to review your position and consider your options early.
ATO tax debt: The financial impact broken down
Here’s a quick example of what the ATO’s change will mean for small businesses financially:
Small business will be paying thousands more just in lost tax benefits in the new financial year. For businesses juggling tight margins, that money could be better spent on supplier payments, payroll, stock, or simply easing day-to-day cash flow pressure.
Separates Growth from Survival
Borrowing lets you invest in growth instead of constantly reacting to shortfalls or falling behind.
Instead of juggling unpaid ATO tax, you refinance or borrow smartly to consolidate, reduce stress, and focus on building forward momentum.
We can help you clear tax debt fast so you can get back to business and stay focused on growth.
Borrow $5,000 to $5milliion
No upfront credit checks
We work with small businesses that need funding fast – particularly for time-sensitive situations like paying down tax debt. In many cases, we can pay the ATO directly, which may help ease immediate cash flow pressure and reduce further interest accrual.
While some lenders view tax debt as a barrier, our approach looks at the broader picture. We don’t automatically rule out businesses with ATO obligations—we assess each situation on its own merits to see if we can provide a funding solution that fits.
This isn’t financial advice. But if funding could be part of the way forward, we’re here to talk through your options.
If your business is managing ATO debt and you’re considering your next steps, it’s worth speaking with a trusted financial adviser or accountant to understand how the upcoming deductibility changes may affect you.
What now?
If your business has outstanding tax debt and you’d like to explore how we can help, now’s the time to take action.
Call us on 0489 085 525 or reach us or book an appointment with us www.thrivebroking.com.au