Key takeaways
- •Whether a loan secured by your property can pay a $250,000 Australian Taxation Office (ATO) debt depends on one sum: 70% of the property's value, minus the loan already owing on it.
- •A second mortgage leaves your existing bank loan in place. A first mortgage gives your business one loan that repays the bank loan and pays the ATO debt at the same settlement.
- •Size the loan to the ATO balance on the day your business pays it, not the figure on an older ATO letter, because the general interest charge is added to the debt every day until it is paid.
- •In this article's example of a $1,000,000 property with a $400,000 bank loan, interest is about $5,254 a month on a $650,000 first mortgage at 9.7% p.a., or about $2,490 a month on a $250,000 second mortgage at 11.95% p.a.
- •A private loan to pay an ATO debt usually runs for months, not years, and is repaid in full through a defined exit, such as a bank refinance or the sale of a property.
- •The company, property and figures in this worked example are invented to show the arithmetic. They do not describe a real client, and they are not a loan quote.
If your company owes the Australian Taxation Office about $250,000 and you or your business own a property with a bank loan on it, you can work out in a few minutes whether borrowing against that property can pay the ATO debt in full. The test is the property's value, the 70% maximum loan-to-value ratio, and what is already owing on it. This article works through that sum step by step with one set of example figures, so you can repeat it with your own.
We would be glad to help your business with this. A private loan backed by property is a good fit for an ATO debt because your business borrows against equity it can already use, and the loan can be in place quickly: we lend our own funds, our in-house team values the property, in most cases we decide in hours, and we can settle within 24 hours. 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 with its bank or the sale of a property.
The example: the starting figures
Illustrative example only. The company, the property, its value and the bank loan below are invented to show the arithmetic. None of it describes a client, and none of it is a quote.
| Illustrative example only | Figure |
|---|---|
| The borrower | A trading company, which is the borrower for the loan |
| ATO debt | $250,000 owing on the company's activity statement account, projected to the day of payment |
| The property | The industrial property the company owns, valued at $1,000,000 |
| Existing bank loan | $400,000, on a first mortgage over that property |
| Planned repayment | A refinance with a bank once the ATO account is clear |
| Loan term | 6 months |
The arithmetic is the same if the property is a director's home or investment property instead of the company's industrial property. The company is still the borrower, and the director's property is the security.
Step 1: How much the property can support
Total borrowing on the property, including the existing bank loan, can be up to 70% of its value. On a second mortgage, the 70% is the first and second mortgages combined.
In the example, 70% of $1,000,000 is $700,000. The bank loan already uses $400,000 of that, which leaves up to $300,000 available. A $250,000 loan to pay the ATO brings total borrowing on the property to $650,000, which is 65% of its value and inside the 70% maximum.
Our in-house valuers confirm the property's value, so there is no wait for an outside valuation. If the $300,000 had been less than the ATO debt, a second property could be added as additional security, with combined borrowing across both properties staying within the same 70% maximum.
Step 2: How much the loan needs to cover
The amount on an ATO letter is the balance on the day the letter was issued. The general interest charge is added to an overdue balance every day until it is paid. According to the ATO's general interest charge rates table, the rate for October to December 2026 is 11.51% a year, a daily rate of 0.03153425%. The ATO's page on payment plans explains that the charge compounds daily, including on a debt that is on a payment plan.
On $250,000, that daily rate adds about $79 a day. Over 14 days, for example between the date of a statement and the day of settlement, the balance grows by about $1,106, assuming the rate stays the same. A loan sized to a 2-week-old statement would leave that amount still owing to the ATO.
So ask your accountant for the balance on every overdue ATO account the company has, projected to the day you expect to pay, and size the loan to that total. One loan can give the business the funds to pay its income tax, activity statement and superannuation guarantee charge debts together, as long as total borrowing stays within 70% of the property's value. In the example, $250,000 is the projected balance on the payment day.
Step 3: A second mortgage or a first mortgage
There are two ways to structure the loan on the same property. Both reach the same total borrowing of $650,000.
| Illustrative example only, interest at our lowest published rates | Second mortgage | First mortgage |
|---|---|---|
| Loan amount | $250,000 | $650,000 |
| What the loan funds pay | The ATO debt | The ATO debt and the $400,000 bank loan |
| The existing bank loan | Stays in place with the same bank | Repaid at settlement |
| Total borrowing on the property | $650,000, or 65% of its value | $650,000, or 65% of its value |
| Interest rate from | 11.95% p.a. | 9.7% p.a. |
| Interest per month at that rate | $250,000 × 11.95% ÷ 12 = about $2,490 | $650,000 × 9.7% ÷ 12 = about $5,254 |
| What that interest covers | Our $250,000 loan only. The bank loan's own repayments continue as before | The whole $650,000, including the amount that was owing to the bank |
A second mortgage behind the existing bank loan suits a company that wants to keep its bank loan as it is, for example because the rate or the term suits it. There are two lenders on the property for the term of our loan. Check your bank loan agreement for any terms about a second mortgage, and your solicitor can confirm what it requires.
A first mortgage suits a company that would rather have one lender and one loan on the property. At settlement the loan funds are paid to the business, which repays the bank loan and pays the ATO, and our mortgage is registered in first position.
The rates in the table are the lowest we publish. The rate offered depends on the scenario, and the letter of offer sets out the rate and every term of the loan, including any other costs. The interest figures above are interest only and are not the total cost of the loan.
Step 4: The term and how the loan is repaid
Loan terms run from 1 to 24 months, and most are 3 to 6 months. The example uses 6 months.
Over 6 months at the rates in the table, interest comes to about $14,938 on the second mortgage, or about $31,525 on the first mortgage. Both figures are interest only, at the lowest published rate.
The loan is repaid in full at the end of the term from a defined exit, agreed before settlement. In the example, the exit is a refinance with a bank once the ATO account is clear: on the second mortgage, the company refinances our $250,000; on the first mortgage, it refinances the full $650,000. A sale of the property, or of another property, can also repay the loan. When the loan is repaid, our mortgage is discharged from the title.
Step 5: From the first call to the ATO payment
In most cases we decide within hours of receiving the deal. Once terms are agreed, we issue a letter of offer immediately, and we can settle within 24 hours. At settlement the loan funds are paid to the business, and the business pays the ATO the full balance on each account. Allow for the time the payment takes to appear on the ATO account if a notice has set a deadline.
Whether borrowing to pay the ATO suits your company, how the interest is treated for tax, and whether the company can pay its debts as they fall due are questions for your accountant or an insolvency practitioner. If a company is later wound up, the Corporations Act can make a payment to one creditor voidable as an unfair preference, so a director unsure of the company's solvency should speak to their accountant or an insolvency practitioner before the company borrows to pay the ATO. We are a lender, and we do not give tax or insolvency advice.
If your figures are different
Illustrative examples only. The same sum works for other starting figures.
| Illustrative example only | How the sum changes |
|---|---|
| No bank loan on the property | A $250,000 first mortgage on a $500,000 property is 50% of its value: $250,000 ÷ $500,000 |
| A larger ATO debt | The same sum applies: 70% of the value, minus the existing loan. Loans start from $250,000, with larger loans assessed case by case |
| The property is held in an existing company or trust | That property can be the security, and the arithmetic is the same |
| One property does not cover the debt | A second property can be added as additional security, within the same 70% maximum |
Case study: $250,000 to stop an ATO winding-up application
The example above is invented. This loan was real. An accountant contacted us on behalf of a client who had been served with a winding up notice from the ATO and had two days to pay $250,000 or face the immediate liquidation of the company. Other lenders the accountant approached could not act in time.
We arranged a $250,000 tax debt loan secured by a second mortgage over the director's residential property, and approved and funded it within 24 hours. The winding up application was dismissed and the business survived.
The client then began working with their broker to refinance our short-term loan with a longer-term one.
Frequently asked questions
How much can I borrow against my property to pay the ATO?
Total borrowing on the property, including any existing loan, can be up to 70% of its value. Take 70% of the value and subtract what is already owing: on a $1,000,000 property with a $400,000 loan, that leaves up to $300,000.
Do I have to refinance my bank loan?
No. A second mortgage sits behind your existing bank loan, which stays in place with the same bank. A first mortgage is the other option, where our loan repays the bank and the ATO debt together.
How much should the loan be if the ATO balance keeps growing?
The loan should match the ATO balance on the day your business pays it. The general interest charge is added every day, about $79 a day on $250,000 at the October to December 2026 rate, so ask your accountant for each account's balance projected to the payment day.
Is the rate in the example the rate I will get?
The example uses our lowest published rates: from 9.7% p.a. for tax debt loans and first mortgages, and from 11.95% p.a. for second mortgages. The rate offered depends on the scenario, and the letter of offer sets it out.
Can my home secure a loan for my company's ATO debt?
Yes. The company is the borrower, and a director's home or investment property can be the security. The loan funds are paid to the company, which then pays the ATO.
How Secured Lending Can Help
We would be glad to run these numbers with you for your own property. Our tax debt loans give your business the funds to pay the ATO in full, secured by a first or second mortgage over residential, commercial or industrial property that your business, a director or an owner already owns. The property does not have to be sold, and on a second mortgage your bank loan stays as it is.
A private loan suits this problem because it can be in place before the ATO balance grows much further. We lend our own funds and our in-house team values the property, so in most cases we decide within hours, issue a letter of offer as soon as terms are agreed, and can settle within 24 hours. A live ATO tax debt listing on its own is not a reason we decline. Your business then repays us through a defined exit, such as a refinance with its bank or the sale of a property.
We provide secured loans backed by real property. If you would like us to look at your figures, it helps to have three numbers to hand: the ATO balance, what the property is worth, and what is owing on it. 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.
