Key takeaways
- •A building or contracting business must pay its business activity statements, wage withholding and super to the Australian Taxation Office (ATO) on fixed dates, but its own cash arrives when the principal or head contractor certifies and pays each claim.
- •The ATO's general interest charge compounds daily on an overdue tax balance, including a balance on a payment plan, so the amount your business owes grows every day it stays unpaid.
- •The ATO can send a garnishee notice to the principal or head contractor that owes your business a progress payment, which requires them to pay the ATO instead of paying your business.
- •Company directors can be personally liable for the company's unpaid pay as you go withholding, goods and services tax and super guarantee charge, which the ATO can recover from them 21 days after it issues a director penalty notice.
- •A private loan from Secured Lending, from $250,000 and secured by property, gives your business the funds to pay the ATO in full, and is repaid through a defined exit such as a bank refinance or the sale of completed stock.
- •Secured Lending lends only against real property, such as the yard, office or depot property your business owns or a director's home, and never against your plant, your claims, your retentions or the building contract.
If your building or contracting company owes the Australian Taxation Office more than it can pay this month, the money to pay it has often already been earned. It sits in a claim the principal has not certified yet, a variation still under negotiation, or a retention the principal is holding after practical completion. The ATO does not wait for any of those dates, and the general interest charge is added to the balance every day it stays unpaid.
We would be glad to help your business pay the ATO before those payments arrive. A short-term private loan, backed by property your business or a director owns, gives your business the funds to pay the ATO in full now, and your business repays us later through a defined exit agreed before settlement. A private loan is a good fit for a builder's tax debt because it can be in place quickly: we lend our own funds, in most cases we decide within hours, and we can settle within 24 hours. We lend against the property, and a tax debt on its own is not a reason we decline. Loans start from $250,000, with larger loans assessed case by case.
Why ATO debt builds up in a construction business
The ATO's dates are set in advance. A business that reports quarterly lodges and pays its business activity statement by 28 October, 28 February, 28 April and 28 July, and a monthly reporter pays by the 21st day of the following month, under the ATO's due dates for lodging and paying your BAS. The goods and services tax and the withholding from site wages reported on those statements fall due on those dates, whether or not the principal has paid.
Super is now paid on the payroll cycle as well. Under Payday Super, from 1 July 2026 employers pay super for each payday, and the contributions must be received by the employees' funds within 7 business days. The ATO's page says employers still pay super for independent contractors paid mainly for their labour, so a builder's labour-only contractors can be part of that amount. Whether a particular contractor is covered is a question for your accountant.
The money that pays all of this comes in on a different timetable. A claim is paid after the principal or head contractor certifies it, a variation is paid once it is agreed, and a retention is released at the end of the contract. When those dates slip, the business has to choose between paying the ATO and paying its crews and suppliers.
The cost of waiting is the general interest charge, which compounds daily on the amount overdue. The ATO's annual rate for October to December 2026 is 11.51%, and the charge incurred on or after 1 July 2025 cannot be claimed as a tax deduction. Under the ATO's payment plan rules, a debt on a plan keeps accruing the charge until it is paid.
What the ATO can do to a builder
A garnishee notice on the principal or head contractor
The ATO can issue a garnishee notice to businesses or individuals who owe you money, and the ATO's page gives trade debtors as the example. For a builder, the principal or head contractor that owes you a progress payment is a trade debtor. The notice requires them to pay the ATO instead of you, and it can continue until the full amount is paid, unless the ATO varies or withdraws it.
The ATO can also issue a notice to the solicitor, agent or purchaser in the sale of a property you own, and collect the surplus after secured creditors are paid. For a builder selling completed stock, that is the settlement money.
The ATO sends a warning letter before it issues a garnishee notice, and its page says that paying the debt in full avoids the collection action. If a notice has already been issued, our page on urgent short-term loans to pay an ATO debt covers that timetable.
A director penalty notice on withholding, goods and services tax and super
Under the ATO's director penalty regime, directors can become personally liable for the company's unpaid pay as you go withholding, goods and services tax and super guarantee charge. The ATO can recover those amounts from a director 21 days after it issues a director penalty notice.
The director's liability runs in parallel with the company's, so a payment the company makes reduces both by the same amount. Paying the company's ATO balance in full is therefore also how the directors' liability for those amounts is reduced. Which remission options are still open on a particular notice is a question for your accountant.
How the loan pays the ATO, and how it is repaid
Your business is the borrower. At settlement the loan funds are paid to your business, which then pays the ATO in full, and your business repays us through the exit agreed before settlement.
| Loan feature | Detail |
|---|---|
| Borrower | Your company, including a company acting as trustee |
| Loan size | From $250,000, with larger loans assessed case by case |
| Interest rate | Tax debt loans from 9.7% p.a. Second mortgages from 11.95% p.a. |
| Term | 1 to 24 months, typically 3 to 6 months |
| Security | A first or second mortgage over residential, commercial or industrial property |
| Maximum loan-to-value ratio | 70%. On a second mortgage, 70% is the existing loan and ours combined |
| Repayment | Through a defined exit, such as a bank refinance once the ATO account is clear, or the sale of completed stock or another property |
For many builders the exit is a refinance with the bank once the ATO account shows nothing overdue, or the settlement of completed dwellings the business already has on the market. Tell us about the claims and retentions your business is waiting on as well, so we understand the whole cash position when we talk through the term.
Our tax debt loans cover the full ATO balance, including income tax, activity statement debts and super guarantee charge in one loan. We are a lender, and we do not give tax or insolvency advice. Your accountant advises on remission, goods and services tax accounting and whether the company can pay its debts as they fall due, and a solicitor advises on payment disputes with a principal.
What backs the loan, and what does not
We lend against real property, and nothing else. The security can be the commercial or industrial property your business owns, such as the yard, office or depot property, a director's home or investment property, completed stock, or a development site. Property already held in an existing company or trust can also secure the loan. If one property does not have enough equity for the whole ATO balance, a second property can be added within the same 70% maximum.
We lend against property, never against the plant itself, the claims, the retentions or the contract. None of them is security for the loan. A certified claim may well be how your business pays its other bills, but it is not what secures our loan.
Our in-house valuation team assesses the property directly, including development sites and land, so the loan does not wait on an outside valuer. Our construction industry page covers the other loans we write for builders and trades.
Case study: $1.3 million second mortgage over industrial property to clear a tax debt
A client with a portfolio of industrial properties in Bankstown was close to finalising a refinance across several properties when an outstanding ATO tax debt stopped it. Once the refinance lenders saw the unpaid tax, the deal stopped.
We structured a $1.3 million second mortgage secured against two of the client's industrial properties, and the loan gave the client the funds to clear the outstanding ATO liabilities in full. With the tax debt paid, the client could return to its mainstream lender, and the loan terms allowed our facility to be repaid once that refinance concluded.
Frequently asked questions
Can my excavators, trucks or other equipment secure the loan?
No. We lend against real property only: residential, commercial or industrial property, including the yard, office or depot property your business owns or a director's home. The plant and vehicles stay outside the loan.
The claim has not been certified yet. Can the loan still go ahead?
Yes. The loan does not depend on the claim being certified, because it is secured by property and repaid through an exit agreed before settlement, such as a bank refinance or a property sale. Tell us about the claim when you apply so we understand when your business expects the cash.
Can the ATO take my progress payments from the head contractor?
Yes. The ATO can issue a garnishee notice to a business that owes you money, and the head contractor would then pay the ATO instead of you until the debt is paid or the notice is varied or withdrawn. Paying the ATO in full before a notice is issued avoids it.
Am I personally liable for unpaid withholding and super?
You can be. Directors can be personally liable for the company's unpaid pay as you go withholding, goods and services tax and super guarantee charge, and the ATO can recover those amounts 21 days after it issues a director penalty notice. Your accountant can tell you where your company stands.
Will a tax debt on our credit file stop the loan?
A tax debt on its own is not a reason we decline. We look at the property, the equity within the 70% maximum loan-to-value ratio, and how your business will repay the loan.
How Secured Lending Can Help
We would be glad to help your business pay its ATO debt now, without waiting for the next claim to be certified or a retention to be released. Our loan gives your business the funds to pay the ATO in full, secured by a first or second mortgage over property your business or a director already owns. Your business then repays us through a defined exit, such as a bank refinance or the sale of completed stock.
A private loan suits a builder's tax debt because the ATO's dates are fixed and our process is quick. We lend our own funds and our in-house team values the property, so nothing waits on an outside valuer or another funder. In most cases we decide within hours, we issue a letter of offer as soon as terms are agreed, and we can settle within 24 hours.
If you would like us to look at your situation, it helps to have these to hand:
- •The ATO statement of account and any notice your business has received, with its date.
- •The property that could back the loan, its estimated value and any existing loan on it.
- •How your business plans to repay the loan, and roughly when.
- •The claims and retentions your business is waiting on, with their expected dates.
You are welcome to call us on 1300 795 175 to talk it through, or send the details through and we will come back to you. In most cases, we can tell you within hours whether we can help.
