Key takeaways
- •A firmer action warning letter from the Australian Taxation Office (ATO) warns that it is preparing to take firmer steps to collect a tax debt. The letter itself is not a director penalty notice or a garnishee notice.
- •The ATO publishes no fixed number of days between a firmer action warning letter and its next step. Worrells, an insolvency firm, reported in April 2025 that for taxpayers who do not engage with the ATO, enforcement action was coming as quickly as 23 days from the date a payment became overdue.
- •After a firmer action warning letter, the ATO can report the tax debt to credit reporting bureaus, issue a director penalty notice or a garnishee notice and, for a company, serve a statutory demand.
- •Paying your ATO balance in full avoids a credit bureau report, a director penalty notice, a garnishee notice and a statutory demand, and stops the general interest charge the ATO adds to that balance each day.
- •Where it cannot agree a payment plan with your business, the ATO may accept a mortgage over freehold property as security for a plan, but under that secured plan the tax debt stays owing and the general interest charge keeps compounding daily.
- •A private loan from Secured Lending, from $250,000 and backed by property, gives your business the funds to pay the ATO in full, and we can settle within 24 hours once terms are agreed.
An ATO firmer action warning letter means the ATO is preparing to take firmer action to collect a tax debt. That action may include a director penalty notice, a garnishee notice or a report of your business's tax debt to credit reporting bureaus, and the ATO's own pages say paying the debt in full avoids it.
We would be glad to help you make that payment before the ATO takes its next step. If your business owes the ATO $250,000 or more and your business or a director owns property, a short-term private loan backed by that property is a good fit for this problem. We lend our own funds, in most cases we decide in hours, and we can settle within 24 hours once terms are agreed. We lend against the property, and a tax debt on its own is not a reason we decline. The loan funds are paid to your business, which pays the ATO in full, and your business then repays us through a defined exit, such as a refinance or the sale of a property.
What the firmer action warning letter is
The ATO's own name for this letter is a firmer action warning letter. Its 2024–25 annual report uses it when describing its approach to taxpayers who have needed repeated audit action for super guarantee charge and pay as you go withholding: "These taxpayers receive a firmer action warning letter as the first action and can expect us to move quickly to firmer actions such as director penalty notices or garnishees where obligations are not met."
A warning letter also comes before a garnishee notice. The ATO's garnishee notice page explains that it writes to you first, advising you to pay, and that paying the debt in full at that point avoids the collection action.
So the letter is a warning. The ATO has not yet taken money from the business or started recovering the debt from a director. Its page on firmer action sets out two ways to avoid that action: pay the debt in full and on time, or set up a payment plan.
How long you have after the letter
The ATO's pages on firmer action, garnishee notices and director penalties do not give a fixed number of days between a warning letter and the first enforcement step. What is on the record comes from practitioners and from the ATO's own figures.
Worrells, an insolvency firm, reported in April 2025 that for taxpayers who do not engage with the ATO, "they are implementing enforcement actions as quickly as 23 days from the date payment is overdue." Those 23 days are Worrells' observation, not an ATO rule, and they run from the date the payment became overdue, not from the date of the letter.
The ATO's volumes show how often these steps are taken. In 2024–25 it issued over 84,000 director penalty notices and over 15,000 garnishee notices, according to a September 2025 speech by Deputy Commissioner Anna Longley.
What the ATO can do next
| ATO step | What it does | Time it gives |
|---|---|---|
| Credit bureau disclosure | Reports the debt to credit reporting bureaus, where at least $100,000 is overdue by more than 90 days and the business is not engaging with the ATO | 28 days from receiving the notice of intent to disclose |
| Director penalty notice | Must be given before the ATO can recover the company's unpaid pay as you go withholding, goods and services tax and super guarantee charge from a director personally | 21 days from the day the ATO posts it |
| Garnishee notice | Requires a bank, a trade debtor, a merchant card provider, or the solicitor, agent or purchaser on a property sale to pay the ATO instead of you | No fixed period published. A warning letter comes first |
| Statutory demand | Requires the company to pay the entire debt or enter a payment plan | 21 days, after which the ATO may apply to the Federal Court to wind up the company |
What paying the ATO in full now avoids
Each of these steps depends on a debt that is still unpaid. Once the ATO is paid in full, there is no overdue balance for it to report, garnishee or demand.
A credit bureau listing. Under the ATO's rules on disclosing business tax debts, the notice of intent to disclose gives 28 days to act. Paying in full inside those 28 days means the business no longer meets the criteria for reporting. A debt that has already been reported is removed from the credit report once it is paid in full or the business engages effectively with the ATO to manage it.
A director penalty notice. Under the director penalty regime, a director penalty is a parallel liability: a payment towards the company's debt or the director's penalty reduces both by the same amount. Reporting dates matter here. Where pay as you go withholding or goods and services tax was reported more than 3 months after the due date, or not reported at all, the ATO's rule is that "The director penalty can only be remitted by paying the corresponding company liability in full". The ATO treats its own estimates of those amounts as never reported. If you already hold a director penalty notice, our page on urgent loans to pay a director penalty notice covers the 21 days.
A garnishee notice. A bank, trade debtor or merchant card provider that receives a garnishee notice is legally required to pay the ATO. On the sale of a property you own, the ATO garnishees the surplus equity after secured creditors are paid. Paying the ATO first means a planned property sale goes ahead on your timetable, with no garnishee on the proceeds.
A statutory demand and a wind-up application. Under the ATO's page on legal action, a statutory demand gives the company 21 days to pay the entire debt or enter a payment plan. If the company does not comply, the ATO may use the non-payment as evidence the company is insolvent and apply to the Federal Court to wind it up. Our guide to an ATO statutory demand covers that step in more detail.
How a private loan pays the ATO in full
The business is the borrower. At settlement the loan funds are paid to the business, which then pays its ATO balance in full in one payment. Where the company owes on more than one ATO account, such as income tax and an activity statement account, one loan can cover all of them. Under the ATO's payment plan set-up rules, those two debts would need separate payment plans.
| Loan feature | Detail |
|---|---|
| Borrower | The business |
| Loan size | From $250,000, with larger loans assessed case by case |
| Interest rate | From 9.7% p.a. on our tax debt loans, from 11.95% p.a. on a second mortgage behind an existing loan |
| Term | 1 to 24 months, typically 3 to 6 months |
| Security | A first or second mortgage over residential, commercial or industrial property owned by the business or a director, including property already held in a company or a trust |
| Maximum loan-to-value ratio | 70%. For a second mortgage, the first and second mortgages combined. A second property can be added as additional security within the same 70% |
| Repayment | The business repays the loan to us through a defined exit strategy, for example a refinance or a property sale |
We are a lender, and we do not give tax advice. Director penalty defences, remission options and whether the company can pay its debts as they fall due are questions for your accountant or an insolvency practitioner.
The ATO's secured payment plan, and a loan backed by the same property
Where the ATO cannot reach an agreement with you on paying, its page on alternative payment plans says it may consider accepting security for a plan, and its preferred securities are a registered mortgage over freehold property or an unconditional bank guarantee from an Australian bank. Where the ATO takes a mortgage, your property backs the debt under the ATO plan or under a private loan. The difference is whether the ATO balance is paid now or paid over time.
On a payment plan, the tax debt keeps accruing general interest charge, compounding daily. If a new lodgement or tax payment is missed, the plan may default, and the full overdue balance becomes payable at once. A plan for more than $200,000 has to be arranged by phone, and the ATO asks extra questions if you have received a warning of firmer or legal action in the past 6 months.
With a private loan, the business pays the ATO in full instead, so general interest charge stops on that balance and there is no plan left to default. For October to December 2026 the general interest charge rate is 11.51% a year, a daily rate of 0.03153425%. On an overdue balance of $500,000, that adds about $14,390 over 90 days if the rate does not change (our calculation from the ATO's published daily rate). The ATO reviews the rate every quarter, and general interest charge incurred on or after 1 July 2025 cannot be claimed as a tax deduction. Our rates are in the table above. Ask for our full offer in writing, with every cost, before you compare, and ask your accountant whether loan interest is deductible for your business.
Case study: $500,000 to repay an ATO debt in Melbourne
A long-time referrer in Melbourne contacted us about a client business that had traded well through the pandemic but fell behind on its ATO obligations. The business was at risk of being wound up and needed a solution fast.
The two directors jointly owned the commercial suite the business operated from, and also held an investment property in Melbourne. We lent $500,000 on a second registered mortgage across both properties. The loan was used to fully repay the outstanding ATO liability and to provide additional working capital to keep the business trading.
Paying the ATO in full avoided a default listing with the credit agencies and protected the directors from personal penalty notices.
Frequently asked questions
Can the ATO take money from my business bank account without going to court?
Yes. The ATO issues garnishee notices under section 260-5 of Schedule 1 of the Taxation Administration Act 1953 and serves you a copy. A garnishee notice can continue until the full amount is paid, unless the ATO varies or withdraws it.
Will the ATO debt appear on my business credit file?
It can, if at least $100,000 is overdue by more than 90 days and the business is not engaging with the ATO. Paying the debt in full within the 28 days the ATO's notice of intent to disclose gives you avoids the report. If the debt has already been reported, paying it in full removes it from the credit report. A tax debt already on the credit file is not, on its own, a reason we decline a loan.
The ATO offered a secured payment plan over my property. How is a loan over the same property different?
The ATO plan leaves the balance owing to the ATO, with general interest charge accruing daily. A private loan gives the business the funds to pay the ATO in full, so the ATO account is clear and there is no plan to default on.
I was going to sell a property to pay the ATO. Can I still do that?
Yes. A loan can give the business the funds to pay the ATO before any garnishee notice reaches the solicitor, agent or purchaser, so the sale goes ahead on your timetable and repays the loan.
Can I borrow against property to pay the ATO?
Yes. We lend from $250,000 to the business for business purposes, on the terms in the table above. The property can be owned by the business, a director, or an existing company or trust.
How Secured Lending Can Help
We would be glad to help your business pay the ATO before it takes its next step. The letter gives no date for that step, so speed matters. Our loan gives your business the funds to pay its whole ATO balance in one payment, before a credit listing, a director penalty notice, a garnishee notice or a statutory demand. Your business then repays us through a defined exit, such as a refinance or the sale of a property.
A private loan suits this problem because it can be in place quickly and because it is secured against property. We lend our own funds, and our in-house team values the property, so there is no wait for an outside valuer. In most cases we decide in hours, issue a letter of offer as soon as terms are agreed, and can settle within 24 hours. A tax debt on your business's credit file is not, on its own, a reason we decline.
We provide secured loans backed by real property. If you would like us to look at your situation, it helps to have these to hand:
- •The ATO letter, and any later notice, with the dates you received them.
- •The current balance of each ATO account.
- •The property that could back the loan, its estimated value and the balance of any loan already on it.
- •How your business plans to repay the loan, and roughly when.
Our page on tax debt loans sets out how the product works across all ATO debts. 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.
