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Disclosure of business tax debts was introduced to stop businesses using unpaid tax as an invisible overdraft while other creditors extended terms in ignorance. Its practical effect on a borrower is immediate: trade suppliers tighten, equipment financiers decline, and the bank’s credit system flags the file.
The criteria
The ATO can disclose where all of these apply: the entity has an ABN; it has one or more tax debts totalling at least $100,000 overdue by more than 90 days; it is not effectively engaging with the ATO to manage the debt; and it has no active complaint with the Inspector-General of Taxation about the disclosure. Before reporting, the ATO sends a notice of intent to disclose and gives 28 days to respond. That window is the moment to act.
Why asset-secured lenders still lend
Their assessment does not start with the credit file. It starts with the title search, the first mortgage statement and the valuation, and then the exit. A tax default listing tells the lender what it already knows from the borrower: there is an ATO debt, and the loan is to pay it. Provided there is equity and a credible exit, the listing affects price at the margins and not much else. See caveat loans with bad credit.
How the listing comes off
Pay the debt, or enter a payment plan and keep it, and the entity no longer meets the criteria. The ATO then asks the credit reporting bureaus to remove the information, which it says it does promptly. This is different from ordinary commercial defaults, which can sit on a file for years even after payment.
Sequence matters for the exit
The common path is:
- Asset-secured funding pays the ATO in full.
- The ATO confirms a nil balance and the listing is removed.
- Lodgements are kept current for two or three BAS cycles.
- A mainstream lender refinances the private loan on normal terms.
Step four is the exit the private lender is relying on, so it needs to be realistic. A bank will want to see the debt gone, lodgements current, and financials that show the business can service the refinance. Allow 6 to 12 months, and choose a second mortgage term that covers it.
If the 28-day notice has just arrived
Engage. Call the ATO or have your accountant do it, lodge anything outstanding, and either pay, propose a plan or tell them finance is being arranged. Engagement alone can stop disclosure. More on the enforcement sequence is on the ATO tax debt funding page.
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Get matched with a funderFAQ
When does the ATO report a tax debt?
It can report where a business has an ABN, owes $100,000 or more that is over 90 days overdue, and is not effectively engaging. It must first issue a notice of intent to disclose and allow 28 days.
How long does the listing stay?
The ATO asks for removal once the debt is paid in full, a payment plan is entered and kept, or the debt is otherwise resolved. It does not linger for years like a commercial default if it is dealt with.
Will a payment plan remove it?
Entering into and keeping a payment plan counts as engaging, and the ATO will generally stop or withdraw disclosure.