Key takeaways
- •The Australian Taxation Office (ATO) can take a mortgage over property in two ways: as security you offer to get a payment plan accepted, or under a written security notice that your business must comply with.
- •The mortgage the ATO asks for covers the tax debt plus the interest it expects to charge until the debt is paid, so on a plan of a year or more it is registered for more than today's balance.
- •The ATO accepts a second mortgage behind your existing lender where there is enough equity, but the general interest charge on a tax debt continues to compound daily for as long as the debt is on the payment plan.
- •The ATO's mortgage document, called a security deed, sets out what counts as a default, and a breach of the payment plan can be one. On default, the ATO's options include enforcing its mortgage over your property.
- •In New South Wales, your existing home loan or business loan agreement can restrict further mortgages over the property, so ask your solicitor to read it before your business signs the ATO's security deed.
- •A private loan from Secured Lending, secured by the same property, can give your business the funds to pay the ATO in full, so no ATO security deed needs to be signed for that debt.
If the ATO has told you a payment plan will need a mortgage over your property, the property is already on the table. The question is whether it secures a plan that runs for a year or more while interest keeps building, or a short-term loan that gives your business the funds to pay the ATO in full now.
We would be glad to help you work through that choice. A private loan backed by property is a good fit here because it uses the equity the ATO is already asking about, and it can be in place quickly: we lend our own funds, our in-house team values the property, and we can settle within 24 hours. The loan funds are paid to your business, which pays the ATO in full, and your business repays us through a defined exit, such as a bank refinance or the sale of a property.
Is the ATO asking, or requiring?
There are two ways the ATO comes to hold a mortgage over property, and they are not the same.
The first is security you offer. The ATO's page on alternative payment plans (updated 3 September 2026) says that if it cannot agree a plan with you, it may consider accepting an offer of security, either to defer payment of a debt or to pay it by instalments. Its preferred securities are a registered mortgage over freehold property and an unconditional bank guarantee from an Australian bank. The ATO's policy says security may be required where a plan runs over more than one financial year, or where it has concerns about the business's solvency or its ability to keep to the plan.
The second is a security notice. Under section 255-100 of Schedule 1 to the Taxation Administration Act 1953, the ATO can require security by written notice, for an existing or a future tax liability. The notice must state the amount, why it is required, how it is to be given, the deadline, and how to have the decision reviewed. The ATO's practice statement on debt collection (last amended 16 April 2026) is direct about the consequence:
Failure by a taxpayer to provide security as required is an offence under section 255-110.
If your business has received a security notice, speak to your solicitor or accountant the day it arrives. Review rights exist, and they are a legal question. The rest of this article is about a mortgage offered to get a payment plan accepted.
What the ATO's mortgage covers, and where it sits
The ATO's mortgage is not for the balance on today's statement. Its practice statement sets out how the amount is calculated:
The amount reflected in the security should be for a specific amount (so there is no uncertainty in law) and include the tax debt plus estimated additional charges for late payment, until the debt is fully paid.
On a plan that runs for a year or more, the figure registered against the property is therefore higher than today's balance. The same paragraph says the security can also be arranged to cover future debts, such as an unpaid business activity statement.
The ATO does not insist on going first. Its preferred securities include a registered first mortgage, or a second or later mortgage where there is enough equity to secure the tax debt while giving priority to the existing mortgage. The mortgage can be given by the business, by a third party such as a director or a spouse on title, or by several people together.
What it means for your existing lender
The ATO's mortgage is a further mortgage on the title, the same as any other second mortgage. In New South Wales, a loan agreement can prohibit the borrower from granting further mortgages over the property as a term of the contract, as the law firm Clarke Kann explains in its note on second mortgages in New South Wales. Whether your home loan or business loan contains a term like that, and what it requires of you, depends on the wording, so ask your solicitor to read the loan agreement before your business signs the ATO's deed.
The ATO's deed comes with conditions of its own. The property must be insured at the taxpayer's expense, with the Commonwealth's interest shown on the policy. The ATO's costs of taking the security, which can include solicitors' fees, valuation costs and registration and stamping fees, are payable by the taxpayer when the security is approved.
What a secured payment plan does not change
A mortgage gets the plan accepted. It does not stop the debt growing. The ATO's payment plans page says debts on a plan continue to accrue the general interest charge, which compounds daily. For October to December 2026, the general interest charge rate is 11.51% a year. The rate is reset each quarter.
The deed sets out what triggers default, and the ATO gives a breach of the payment plan as an example. If a default occurs, the ATO's options include telling the taxpayer to pay the debt covered by the security or it will enforce the security, and enforcing it. A plan that defaults also makes the full overdue balance payable at once, which our article on an ATO payment plan that has defaulted covers in detail.
If your business plans to sell or refinance the property during the plan, the ATO's registered mortgage will be on the title when it does. Your solicitor can explain what that means for the settlement.
Paying the ATO in full from the same property
The ATO's own policy lists, among the things it weighs when deciding whether to accept a payment plan, what the taxpayer has done to rearrange its finances or borrow to meet the debt. Borrowing against property is an expected step, not an unusual one.
A private loan gives your business the funds to pay the ATO balance in full. Once the balance is paid, there is no plan for that debt, no instalments and no ATO security deed to sign for it. The title carries a loan with a fixed amount, rate and term, and a dated way out.
There are two ways to set it up:
- •A second mortgage behind your existing lender, which leaves your current loan in place for the months until a sale or bank refinance repays ours. Our second mortgage finance page explains how it works. A second mortgage from us is also a further mortgage on the title, so your solicitor reads the existing loan agreement for this route too.
- •A first mortgage that pays out your existing lender and gives your business the funds for the ATO in the same settlement, so there is one lender on the title.
| 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 | From 9.7% p.a. for tax debt loans, and from 11.95% p.a. for a second mortgage |
| Term | 1 to 24 months, typically 3 to 6 months |
| Security | A first or second mortgage over residential, commercial or industrial property, including a director's home or investment property, or property held in an existing company or trust |
| Maximum loan-to-value ratio | 70%. On a second mortgage, 70% is the combined figure for the existing loan and ours. A second property can be added within the same 70% |
| Repayment | Through a defined exit strategy agreed before settlement, such as a bank refinance once the ATO is paid or the sale of a property |
In most cases we decide in hours, and we issue a letter of offer as soon as terms are agreed. A live ATO tax debt on the business's credit file is not, on its own, a reason we decline.
Whether a secured plan or a loan suits your business, and how the interest is treated for tax, are questions for your accountant. We are a lender, and we do not give tax or legal advice.
Case study: $1.3 million second mortgage to clear a tax debt before a refinance to a mainstream lender
A property investor and business owner with industrial sites in Bankstown was close to finalising a refinance across the group when the lenders saw a substantial outstanding ATO debt, and the refinance stalled.
We structured a $1.3 million second mortgage secured against two of the client's industrial properties, and the funds were made available to clear the ATO liabilities in full. With the tax debt resolved, the client went back to its mainstream lender, and could repay our facility once that refinance was complete.
Frequently asked questions
Will the ATO's mortgage sit in front of my bank?
Not necessarily. The ATO's policy accepts a second or later mortgage where there is enough equity, with the existing mortgage keeping priority. Your existing lender stays first on the title in that case.
Does the interest stop once the ATO has security?
No. Debts on a payment plan continue to accrue the general interest charge, compounding daily, and the ATO sizes its mortgage to include the interest it expects to charge until the debt is paid.
What happens to the property if we miss a payment?
The ATO's deed sets out what triggers default, and a breach of the plan can be one. On default, the ATO's options include asking for the debt covered by the security to be paid and enforcing the security. Your solicitor can explain the deed before it is signed.
My spouse is on the title. Do they have to sign?
The ATO's policy accepts security given by a third party, or by several people together, so a co-owner can be asked to sign. Your solicitor can explain what signing means for each owner.
How Secured Lending Can Help
We would be glad to help your business pay the ATO in full rather than run a secured plan. Our loan gives your business the funds to pay the ATO balance, secured by a first or second mortgage over property your business or a director already owns, and your business then repays us through a defined exit, such as a bank refinance once the ATO is paid or the sale of a property.
A private loan suits this problem because the equity is already there and the loan can be in place before the ATO's deed is signed. We lend our own funds and our in-house team values the property, and we can settle within 24 hours. We provide short-term loans backed by real property. If you would like us to look at your situation, it helps to have these to hand:
- •The ATO's request for security, or the security notice, with its date.
- •The current ATO balance for each account.
- •The property address, its estimated value, the existing loan balance and the lender's name.
- •How your business plans to repay the loan, and roughly when.
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.
