Your business owes the ATO:
$360,000.
You’re already doing something about it.
There’s an agreed payment arrangement in place.
Every week:
$4,000
is paid towards the historical tax debt.
The payments are current.
Required lodgements are up to date.
The business isn’t asking for finance to pay the ATO.
Instead, you need:
$280,000
to purchase equipment for a new contract.
And now you’re wondering:
“Will the lender see the ATO payment plan and decline the equipment finance?”
Not necessarily.
Being on an ATO payment arrangement doesn’t automatically answer the finance question.
But it can become part of the lender’s assessment.
The lender may want to understand what the tax debt says about the business, how the arrangement is being maintained and whether the business can afford another finance commitment alongside it.
The Palmerston Business
Consider an established civil and contracting business operating from Palmerston and working across the greater Darwin region.
The business has traded for:
11 years.
Annual turnover:
approximately $5.6 million.
Employees:
19.
ATO debt:
$360,000.
Agreed ATO payment:
$4,000 per week.
The business wants to purchase:
an excavator
and
supporting equipment
for approximately:
$280,000.
The equipment is required for additional contracted work.
The owner says:
“We’re paying the ATO every week. Surely that should show we’re doing the right thing?”
It may be useful context.
But it doesn’t automatically make the new finance affordable.
Start With the Actual ATO Arrangement
Don’t simply tell the broker:
“I’m on a payment plan.”
Tell us:
current balance,
actual payment amount,
payment frequency,
how long the arrangement has been running,
whether payments are current,
and whether required lodgements are current.
Those details create a much clearer picture.
$4,000 a Week Is Already a Business Commitment
Over four weeks:
$16,000.
Over thirteen weeks:
$52,000.
Over 26 weeks:
$104,000.
That’s a substantial amount of cash being directed towards historical tax debt.
When the business asks for another:
$280,000
of finance, we need to understand whether both commitments can be supported.
The New Equipment Has to Be Considered Alongside the Existing Position
The owner says:
“But the excavator will make money.”
Good.
Let’s quantify that.
The business has secured additional work expected to generate approximately:
$720,000
of revenue over the next twelve months.
The new equipment is required to deliver part of that work.
Now we have a commercial reason for the purchase.
But revenue isn’t profit.
What Will It Cost to Deliver the Work?
Additional annual revenue:
$720,000
Then allow for:
additional operators,
fuel,
maintenance,
transport,
insurance,
materials,
administration,
and equipment finance.
Perhaps the additional contract contributes:
$190,000
after the direct operating costs associated with delivering the work.
That’s more useful than:
“The machine will pay for itself.”
The Existing ATO Payment Doesn’t Disappear
Even if the new contract is profitable, the business still needs to fund:
$4,000 every week
towards the historical ATO debt.
That’s approximately:
$208,000 over 52 weeks
if that payment continued unchanged for the full year.
The actual ATO balance and arrangement can change, and interest may continue to apply to outstanding tax debt.
So we use the real current position rather than assuming a repayment schedule from the original debt amount.
A Performing Payment Plan Can Tell Us Something
Suppose the business has made every agreed payment for:
nine months.
That demonstrates the business has been directing substantial cash towards the debt.
Compare that with a business that:
entered an arrangement,
missed payments,
entered another arrangement,
missed those,
and now wants additional finance.
Same words:
“ATO payment plan.”
Very different history.
But Don’t Overstate What a Performing Plan Means
It doesn’t guarantee:
approval,
a particular lender,
a particular rate,
or
a particular amount.
The lender still needs to assess the overall transaction.
The existence of the plan is one part of the picture.
Is the ATO Debt Going Down?
This is a useful question.
Suppose:
Nine months ago:
$455,000
Today:
$360,000.
The balance has reduced.
Good.
Now compare:
Nine months ago:
$220,000
Today:
$360,000.
Despite having a payment arrangement, the total position has deteriorated.
Why?
A Payment Plan Can Exist While New Tax Debt Builds
This is important.
A business can make:
$4,000 weekly payments
towards historical debt
while still failing to meet new tax obligations.
The owner may think:
“I’ve never missed my payment.”
But the overall tax position may still be getting worse.
That’s why we need to understand both:
historical debt
and
current obligations.
Imagine the Business Is Paying $4,000 but Adding $6,000
Every week:
$4,000 goes towards the old balance.
But the equivalent of another:
$6,000
of current obligations is falling behind.
That’s not a sustainable reduction strategy.
The historical arrangement may be performing while the overall problem continues.
That’s Very Different From a Legacy Debt
Suppose instead:
the $360,000 relates primarily to an earlier period,
current obligations are being managed,
the payment arrangement is being maintained,
and the balance is reducing.
Now the business may have a historical debt problem rather than a continuing tax-cashflow problem.
That’s an important distinction.
Why Did the Palmerston Business Fall Behind?
Two years earlier, the business grew quickly.
It won additional civil work.
That required:
more employees,
more equipment,
larger fuel accounts,
additional vehicles,
and significant mobilisation costs.
Customer payment terms were longer than expected.
The business kept delivering the work.
Cash became tight.
Tax obligations fell behind.
Eventually the ATO balance reached approximately:
$470,000.
The business has since reduced it to:
$360,000.
What Changed?
This is where the story becomes useful.
The business now:
maintains a larger cash reserve,
reviews cashflow weekly,
has improved debtor collection,
has stopped buying equipment from cash,
and provisions for current tax obligations.
The historical debt remains.
But the business has changed how it manages cash.
That’s What I Want to Understand Before Adding Another $280,000
If nothing has changed, additional finance could compound the problem.
If the business has corrected the underlying issue, the equipment request may deserve a completely different assessment.
What If the New Finance Isn’t Related to the ATO at All?
That’s common.
A business might be on an ATO payment arrangement and need finance for:
a truck,
excavator,
loader,
vehicle,
trailer,
machine,
or other productive equipment.
Don’t assume every finance enquiry involving ATO debt is an:
ATO debt refinance.
Sometimes the tax debt remains exactly where it is.
The business simply needs finance for another purpose.
But That Means Total Commitments Increase
Before:
ATO debt:
$360,000
plus existing finance.
After:
ATO debt:
still $360,000
plus existing finance
plus new:
$280,000 equipment facility.
The lender needs to be comfortable with the combined position.
What Existing Finance Does the Business Already Have?
Let’s map it.
Excavator finance:
$210,000 owing
Truck and trailer finance:
$330,000 owing
Vehicle finance:
$145,000 owing
Business credit card:
$42,000
ATO:
$360,000.
Now proposed equipment:
$280,000.
The business already has significant commitments.
That doesn’t automatically mean it is overleveraged.
But we need the whole picture.
Productive Asset Debt Isn’t Automatically Bad Debt
The trucks and excavators generate revenue.
The business has financed assets over their useful operating periods.
That’s normal commercial finance.
The question is whether:
the business generates sufficient cash,
the assets remain productive,
and
the total debt is manageable.
Don’t Hide the ATO Payment Plan Because the Finance Is for Equipment
Tell us at the beginning.
The worst approach is:
“Let’s apply and see if they notice.”
We want to understand the transaction before choosing an appropriate finance pathway.
That means knowing about:
ATO debt,
existing finance,
credit issues,
and anything else materially relevant.
What If the Finance Is for a Replacement Asset?
This can be different from pure expansion.
Suppose an older excavator is being replaced.
Current finance payout:
$85,000.
Trade-in:
$130,000.
Replacement excavator:
$280,000.
Now the transaction may involve:
paying out existing equipment debt,
using trade equity,
and financing the replacement.
The net increase in debt may be substantially less than the headline purchase price.
That’s why we look at the actual transaction.
What If It’s Pure Expansion?
No trade.
No existing asset being replaced.
New equipment:
$280,000.
Now the full new commitment is being added.
That’s a different risk.
But if the machine supports a profitable new contract, there may also be additional cashflow.
Again:
context.
What If the Business Needs $500,000 of New Finance?
The same principles apply.
ATO debt:
$360,000
New finance request:
$500,000.
Total exposure increases materially.
I’d want a strong understanding of:
what the $500,000 buys,
what it produces,
and how the business services everything.
What If the Business Has $500,000 of ATO Debt and Wants Another $500,000?
That’s a:
$1 million question.
Not necessarily a decline.
But definitely not something to assess from:
“Turnover is good.”
We need the numbers.
A $10 Million Business Can Still Have a Cashflow Problem
Large turnover doesn’t protect a business from:
poor margins,
slow customers,
high debt,
excessive drawings,
or uncontrolled growth.
A $10 million business can run out of cash.
That’s why scale needs to be accompanied by profitability and liquidity.
What If the Business Is Highly Profitable?
That helps us understand the position.
Suppose:
turnover:
$5.6 million
operating profit:
$720,000
ATO payment:
$4,000 weekly
current obligations:
up to date
cash reserve:
healthy.
That tells a different story from:
turnover:
$5.6 million
operating loss:
$300,000.
Same revenue.
Very different finance position.
What If the Business Has Plenty of Cash?
Suppose the business has:
$650,000
in cash.
Then why does it still owe the ATO:
$360,000?
Fair question.
Maybe the business deliberately maintains a large working-capital reserve because:
weekly payroll is substantial,
customer payments are uneven,
and contract mobilisation can consume hundreds of thousands of dollars.
But we should still understand why the cash isn’t being used to reduce the debt.
Perhaps Some Cash Should Be Used
The answer doesn’t have to be:
keep all the cash
or
use all the cash.
Maybe the business determines that:
$400,000
is required as a sensible operating reserve.
That leaves:
$250,000
above the target reserve.
Could part of that be used to reduce the ATO?
Potentially.
Then the remaining payment arrangement changes.
The business may not need finance to solve everything.
What If Property Is Available?
The business owner may have:
commercial property,
residential property,
or another property interest.
That could be relevant depending on the finance request.
But if the equipment itself can support an appropriate asset-finance structure, we shouldn’t automatically drag property into the transaction.
Use security because it makes commercial sense, not simply because it exists.
What If the Business Is Applying for Unsecured Finance?
Then the lender may assess the business differently.
The amount,
cashflow,
credit position,
ATO debt,
and overall liabilities
can all become relevant.
Lender requirements differ.
Don’t assume an existing ATO arrangement is treated identically by every lender.
What About Low-Doc Finance?
An established business may have finance options that don’t require the same documentation as a traditional full-financial assessment.
But:
low doc doesn’t mean no assessment.
ATO debt still needs to be disclosed where relevant.
The lender may still require information to understand the business and transaction.
What If the Financials Aren’t Ready?
Tell us.
Perhaps the accountant hasn’t finalised the latest annual accounts.
We can determine what information is available and what a potential lender may require.
Don’t assume:
“No current financials means no finance.”
But don’t assume the opposite either.
What If the Business Has a Signed Contract?
Useful.
Not magic.
The Palmerston business has a contract supporting the equipment purchase.
We’d want to understand:
contract value,
duration,
commencement date,
customer,
payment terms,
and costs required to deliver it.
A $2 million contract with terrible margins isn’t necessarily better than a $700,000 contract with strong margins.
What If the Customer Pays in 60 Days?
Now working capital becomes important.
The equipment may be financed.
But the business still needs to fund:
operators,
fuel,
maintenance,
and other expenses
while waiting for customer payments.
The finance assessment shouldn’t stop at:
“Can we buy the excavator?”
Ask:
“Can the business fund the work after it buys the excavator?”
This Is Where Businesses Can Get Into Trouble
They finance the asset.
Win the work.
Start operating.
Then discover:
the customer pays 60 days after invoice.
Meanwhile:
payroll is weekly
and
the ATO payment is weekly.
The business can be profitable and still experience a severe cash squeeze.
Map the First 60 Days
For the new contract, perhaps:
Additional payroll:
$85,000
Fuel:
$35,000
Materials:
$45,000
Other operating costs:
$25,000
ATO historical payments over eight weeks:
$32,000.
Before significant customer receipts arrive, the business may need:
more than $220,000
of cash across the mobilisation period.
That’s the number I want the owner thinking about.
The Equipment Deposit Isn’t the Whole Funding Requirement
A business might say:
“I only need $280,000 for the excavator.”
Maybe.
But if another:
$200,000+
is needed to operate the contract before payment arrives, the broader cashflow plan matters.
Should the ATO Debt Be Refinance at the Same Time?
Not automatically.
Maybe the payment arrangement is working well.
Maybe the business can afford both.
Maybe refinancing the ATO would unnecessarily complicate the transaction.
Or perhaps the combined cashflow shows that restructuring the tax debt should also be investigated.
That’s a separate decision.
Don’t Turn Every ATO Payment Plan Into an ATO Refinance
This is important.
If a business is successfully paying the debt, current obligations are being met and cashflow is strong, there may be no reason to interfere with it.
The fact that Thrive Broking can investigate finance doesn’t mean finance is automatically the solution.
What Would Concern Me?
An ATO payment plan that has repeatedly failed.
A tax balance that keeps increasing.
Outstanding lodgements.
No cash reserve.
Heavy short-term borrowing.
Poor profitability.
New finance with no clear commercial purpose.
Or an owner who says:
“Don’t worry about the ATO. Just get the equipment approved.”
We need to worry about the whole business.
What Would Give Us a Clearer Application?
A performing business.
A clear explanation of the historical ATO debt.
Current obligations being managed.
An arrangement that is being maintained.
Good trading history.
A productive purpose for the new finance.
And evidence that the business can support both existing and proposed commitments.
None of those guarantees finance.
They simply give us a proper transaction to assess.
What If the ATO Balance Was Originally $500,000?
That can actually provide useful history.
Original balance:
$500,000
Current balance:
$360,000.
The business has reduced the historical debt by:
$140,000.
Now ask:
over what period?
Was the reduction achieved while also meeting current obligations?
What changed in the business?
That’s far more informative than simply:
“They’re on a payment plan.”
What If the Balance Started at $250,000 and Is Now $360,000?
Completely different.
The payment arrangement hasn’t prevented the total debt from increasing.
We need to understand why before adding another finance commitment.
The Direction Matters as Much as the Number
This applies whether the ATO debt is:
$100,000,
$250,000,
$360,000,
or
$500,000.
Is the business moving towards:
zero
or moving away from it?
So Can You Get Business Finance While on an ATO Payment Plan?
Potentially, yes.
An existing payment arrangement doesn’t automatically mean the business cannot investigate finance.
But the lender may need to understand the tax debt and include the business’s existing commitments when assessing the new application.
The outcome will depend on the circumstances and the lender.
Don’t Decide You’re Ineligible Before We Look at It
I’ve worked in finance for around 30 years.
One thing that experience teaches you is that a single fact rarely tells the whole credit story.
“I have an ATO payment plan.”
is one fact.
We still need the rest.
If You’re Already Paying the ATO and Need Finance, Start Here
Tell Thrive Broking:
your current ATO balance,
your actual weekly, fortnightly or monthly payment,
whether the arrangement is current,
whether required tax lodgements are current,
whether the balance is reducing,
annual turnover,
how long the business has traded,
what existing finance you have,
and what the new finance is for.
If you’re buying equipment, send:
the quote,
purchase price,
whether it’s new or used,
and whether you’re replacing an existing asset.
If the finance supports new work, tell us:
what the contract is worth,
when it starts,
and how quickly the customer pays.
Then we can investigate the transaction as a whole.
Because being on an ATO payment plan doesn’t automatically answer:
“Can I get business finance?”
The more useful question is:
“Can this business afford the new finance while continuing to deal with its existing obligations?”
That’s what we need to work out.