Key takeaways
- •When the Australian Taxation Office (ATO) reports an overdue business tax debt to the credit reporting bureaus, it shows on your business credit file as a tax default. It does not stay there for a set number of years.
- •The ATO removes a tax default from your business credit file once your business no longer meets its reporting criteria, which happens when the debt is paid in full or your business engages effectively with the ATO to manage it.
- •A payment default lodged by a supplier on CreditorWatch works differently. Paying the supplier in full does not remove it from your business credit file, and its status can only be updated to Settled.
- •A credit bureau cannot remove an ATO tax default from your business credit file for you. A tax default is resolved by dealing directly with the ATO.
- •A private loan from Secured Lending, from $250,000 and backed by property, gives your business the funds to pay the ATO in full, so the tax default can be removed before your business applies to its bank.
- •A live ATO tax default on your business credit file is not, on its own, a reason Secured Lending declines a loan. The loan is built around the property that backs it and how your business will repay it.
An ATO tax debt on your business's credit file does not stay there for a set number of years. The ATO removes it once your business no longer meets the criteria for reporting, which happens when the debt is paid in full or when your business engages effectively with the ATO to manage it.
If your business has an overdue ATO balance of $250,000 or more and it or a director owns property, a short-term private loan gives your business the funds to pay the ATO in full now. Once the ATO is paid, the entry is removed from the credit file, and your business can apply to its bank with the overdue tax debt cleared. Your business can then repay the private loan from that bank refinance.
We would be glad to help you get there. A private loan backed by property is a good fit for a tax default, because the quickest way to have the entry removed is to pay the ATO in full, and the ATO itself warns that a disclosed debt can affect a business's ability to get finance. We lend our own funds, our in-house team values the property, and we can settle within 24 hours. We lend against the property, and a live tax default on its own is not a reason we decline. The loan funds are paid to your business, which pays the ATO, and your business then repays us through a defined exit, such as that refinance with its bank or the sale of a property.
What the ATO reports, and who can see it
Under the ATO's rules on disclosing business tax debts, the ATO may report a business tax debt to credit reporting bureaus when, among its other criteria, at least $100,000 has been overdue for more than 90 days and the business is not engaging with the ATO to manage the debt. It sends a notice of intent to disclose first, which gives the business 28 days to act. Once the debt is reported, the bureaus show it as a tax default.
The details the ATO reports are the business's Australian Business Number, its legal name and business name, the type of entity it is, and the amount of its overdue tax debt. The same page lists six registered bureaus, including Equifax, Experian and CreditorWatch.
The bureaus' customers see it. When Equifax signed its data agreement with the ATO in April 2022, it said the ATO data would give its customers information to act on during the credit application process that had not been available before. CreditorWatch's tax debt disclosure frequently asked questions says its customers find tax defaults in its credit reports and receive alerts when a business they are monitoring has one registered against it.
How long an ATO tax default stays on the file
There is no fixed period. The ATO's disclosure page sets out the rule for removal: "Your tax debt information will be removed from the CRB's credit report when you no longer meet the criteria. This occurs when you either pay your debt in full or effectively engage with us to manage the debt."
CreditorWatch's help page on ATO tax defaults explains that it receives data updates directly from the ATO every week, and that those updates include removals of tax defaults. If the ATO has removed a default and it still shows on a CreditorWatch report, the change displays in CreditorWatch's next weekly update. The ATO's disclosure page does not say how long the ATO takes to update its records after a payment, so we do not give a number of days.
The bureau cannot remove the entry for you. The same CreditorWatch page puts it plainly: "CreditorWatch cannot change or remove ATO data. To resolve a tax default, you must deal directly with the ATO." If you believe the ATO has the balance wrong, the ATO asks you to phone its disclosure of business tax debts enquiries line on 1300 303 570.
Why an ATO tax default is different from a supplier's default
Paying a debt in full does not have the same effect on every entry on a business credit file.
| Entry | What happens when it is paid in full | Source |
|---|---|---|
| ATO tax default | Removed from the credit report once the business no longer meets the ATO's criteria | ATO, Disclosure of business tax debts |
| Payment default lodged by a supplier on CreditorWatch | Stays on the file. Its status can be updated to Settled | CreditorWatch, Removing a payment default |
CreditorWatch's guide to removing a payment default explains that a payment default cannot be removed once it is recorded, and only a fully paid default can be updated to Settled. A business that lodged a default in error can contact CreditorWatch's support team, and a business whose default is under genuine dispute can request a review of the listing.
So a business that pays a supplier in full still has the default on its CreditorWatch file, which the supplier can update to Settled. A business that pays the ATO in full has no ATO entry once the bureaus update. Which creditor to pay first is a decision for you and your accountant. If your file also carries supplier defaults or a court judgment, our page on business loans with a bad credit history sets out how we assess them.
How a bank reads a live tax default
The ATO's own warning to businesses, in a 2023 media release, was: "A disclosed debt can impact a business’s ability to receive finance and they may lose suppliers."
A bank that sees a live tax default knows from the ATO's criteria that the business owes at least $100,000 that has been overdue for more than 90 days, and that the business is not engaging with the ATO to manage it, for example through a payment plan it is complying with. Each bank sets its own policy on lending while a tax default is live and after it is removed, and we cannot tell you what yours will decide.
We assess the same file differently. A live ATO tax default on its own is not a reason we decline. The tax default shows the amount of overdue tax debt the ATO reported, and our loan is built around the property that backs it and how the business will repay it, as the next section sets out.
Paying the ATO with a private loan, and getting the entry removed
With a private loan, the business is the borrower and the loan funds are paid to the business. The business then pays the overdue ATO debt in full, no longer meets the criteria for reporting, and the ATO removes the entry.
| Loan size | From $250,000, with larger loans assessed case by case |
| Term | 1 to 24 months, typically 3 to 6 months |
| 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 |
| 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 bank refinance once the ATO is paid and the tax default is removed, or the sale of a property |
If your bank already holds a first mortgage over the property, the loan can be a second mortgage behind it, so the existing bank loan stays in place. Our tax debt loans page sets out how the loan works across all ATO debts.
From paying the ATO to the bank refinance
- •Terms are agreed and we issue a letter of offer straight away. The loan can settle within 24 hours.
- •The loan funds are paid to the business, which pays the overdue ATO debt in full and no longer meets the criteria for reporting.
- •The ATO updates the bureaus. CreditorWatch receives the ATO's data weekly and removes the tax default in its next update.
- •Before applying to the bank, ask your broker or accountant to check that a current credit report no longer shows the tax default.
- •The bank assesses the business with its overdue ATO debt paid and no tax default on file.
- •The business repays the private loan from the bank refinance within its term, and our mortgage over the property is discharged.
Case study: $1.3 million to clear tax arrears so a bank refinance could go ahead
A property investor and business owner with a portfolio of industrial sites in Bankstown, New South Wales, was close to finalising a multi-property refinance across the group. Once the lenders saw a substantial unpaid tax debt with the ATO, the refinance stopped.
We lent a $1.3 million second mortgage secured against two of the client's industrial properties in Bankstown. The loan funds were made available to clear the outstanding ATO liabilities in full, which allowed the client to go back to their mainstream lender with the tax issue resolved.
We set the loan to fit the client's projected refinance timeline, so the business could repay it once that refinance concluded.
A payment plan, or payment in full
A payment plan also gets the entry removed, as long as the business complies with it: the ATO counts a payment plan the business is keeping to as effective engagement. Two features of a plan matter for the credit file. Under the ATO's payment plan terms, tax debts on a plan keep accruing the general interest charge, compounding daily. And if new tax obligations are not met, the plan may default, which makes the full overdue balance payable at once. A plan in default is no longer one the business is complying with, so the business can meet the criteria for reporting again.
Payment in full leaves no plan to keep current and no overdue balance to report.
The ATO's general interest charge is calculated daily, compounding on the amount overdue, and the ATO reviews the rate every quarter. For October to December 2026 the general interest charge rate is 11.51% a year. General interest charge incurred on or after 1 July 2025 cannot be claimed as a tax deduction. Our tax debt loans start from 9.7% p.a. Ask for the full offer in writing, with every cost, before you compare.
We are a lender, and we do not give tax advice. Whether to enter a payment plan, lodge an objection or pay one creditor before another are questions for your accountant or registered tax agent.
Frequently asked questions
Is an ATO tax debt on my personal credit file?
The ATO reports business details against the Australian Business Number: the legal and business name, the entity type and the overdue amount. CreditorWatch says tax defaults are registered against unincorporated entities too, including sole traders, trusts and partnerships. If you trade as a sole trader, ask your accountant how a report would appear for you. The ATO's disclosure page links to the Office of the Australian Information Commissioner for checking your own credit reporting record.
Can I dispute an ATO tax default with the credit bureau?
A tax default is resolved with the ATO, not the bureau. CreditorWatch cannot change or remove ATO data. If you believe the ATO's balance is wrong, the ATO asks you to phone its disclosure of business tax debts enquiries line on 1300 303 570.
If I pay the ATO, does a paid default stay on my file?
No. The ATO removes its entry once the business no longer meets the criteria, and paying the debt in full is one way that happens. This is different from a supplier's payment default on CreditorWatch, which stays on the file and can only be updated to Settled.
How long does an ATO tax default stay on a business credit file?
It stays while the business meets the ATO's criteria for reporting, and no longer. CreditorWatch receives the ATO's data every week, including removals, so a removal shows in its next weekly update.
Can my business borrow against property to pay the ATO while the debt is on its credit file?
Yes. A live ATO tax default on its own is not a reason we decline. The business is the borrower, the property can be the business's or a director's, and the loan runs on the terms in the table above.
How Secured Lending Can Help
We would be glad to help your business clear the debt behind its tax default. Our loan gives your business the funds to pay its overdue ATO debt in full, so the tax default can be removed before your business goes back to its bank. Your business then repays us through a defined exit, such as that bank refinance.
A private loan suits this problem because it is quick and because the loan is secured against property. We lend our own funds, and our in-house valuation team values the property, so the loan does not wait on an outside valuer. In most cases we tell you within hours of receiving the details whether we can proceed, we issue a letter of offer as soon as terms are agreed, and we can settle within 24 hours. A live ATO tax default 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 current balance on each overdue ATO account.
- •The property that could back the loan, its estimated value and any existing loan on it.
- •The exit strategy: how your business will repay the loan, and roughly when.
- •A copy of your business's credit report, if you have one.
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.
