As the Australian Taxation Office (ATO) increases pressure to collect outstanding taxes, businesses need to be proactive in exploring all available options to manage debts effectively.
Finlease recognises that managing ATO tax arrears can be challenging for businesses, especially with recent changes in recovery practices.
Finlease Chief Executive Officer Mark O’Donoghue provides some alternative financing options to help companies and individuals meet their obligations.
The current state of play
Mark said that the ATO’s approach to managing arrears has become more aggressive, especially for businesses with debts over $100,000.
The ATO is now:
- Registering defaults on company credit files for any “unaddressed” arrears over $100,000.
- Becoming less receptive to payment plans. If a payment plan is requested, the ATO now requires more detailed financial submissions for debts exceeding $200,000.
For businesses with arrears:
- Under $200,000: A 10 per cent deposit is required, with a typical repayment term of 18 months.
- Over $200,000: A 10 per cent deposit plus supporting financial information must be provided to secure a plan, making cash flow management more difficult.
For a working example, on a $200,000 debt, a standard ATO payment plan might look like:
• Month 1: $20,000
• Months 2–18: $11,400
This shorter repayment schedule can create significant cash flow strain, limiting a business’s ability to operate smoothly.
Exploring alternative solutions
“If a standard ATO payment plan isn’t feasible, businesses can consider alternative financing solutions available to them,” Mark said.
“These come in the form of unsecured or secured working capital loans, which provide more manageable repayment schedules.”
For the same $200,000 debt from above, repayments would look like the following:
• Unsecured working capital loan: Spread over three years at $7300 per month.
• Secured working capital loan: Using unencumbered assets, this loan can be structured over three years at $6575 per month, or over four years at $5200 per month. These options not only offer greater flexibility but also allow businesses to better manage cash flow without sacrificing operational stability.
Why act now?
Finlease has been helping many clients navigate ATO arrears successfully through bespoke finance solutions.
“Our experience allows us to secure tailored repayment options that help businesses reduce stress and improve cash flow,” Mark said.
“Taking proactive steps now ensures your business stays on track and ready for growth.
“Speak with a Finlease broker today to explore finance solutions that fit your needs. We’ll help you manage your debts efficiently and keep your business moving forward.”
More about Finlease
With more than three decades of experience, Finlease works on behalf of its clients as an influential and trusted advocate, negotiating their requirements through a funding base of 30 banks and finance companies.
“We have the expertise to secure the right finance solutions, whether our clients are just starting out or are well-established businesses with ongoing equipment finance needs,” Mark said.
“We work to efficiently spread their debt requirements across a broad base of competitive financiers, fully managing the process year after year.
“In an industry where bank managers often change every 18 months, our clients value the consistency of working with the same dedicated team at Finlease, year in and year out.
“We’re always accessible, even after hours, and are ready to meet clients where and when it’s convenient for them—whether it’s at their home, business premises, work site, or even the local McDonald’s. Like our clients, we’re a privately-owned small business, and we understand that many tasks need to be done outside of normal working hours.
“Our success is built on a straightforward ethos: take care of your clients, and they’ll stay with you for decades.
“Always do the right thing, and always have their back—through the good times and the challenging ones. When you do that, not only will they never want to leave, but they’ll also become your most enthusiastic supporters, spreading the word to others.”
For more information, visit: www.finlease.com.au