ATO debt calculator: payment plan vs business loan
The general interest charge (GIC) is the interest the ATO charges on overdue tax: 11.51% a year for October to December 2026, compounding daily. GIC incurred from 1 July 2025 is no longer tax deductible, so every dollar of it is a real after-tax cost, while interest on a business loan used to pay business tax debts is usually deductible. That means a business loan can cost less than an ATO payment plan after tax, even at a headline rate above GIC.
Your result
Refinancing saves you about $852 after tax
After tax relief, a 14% loan costs you about 10.5% a year. GIC at 11.51% gets no tax relief.
| Measure | ATO plan | Loan |
|---|---|---|
| Monthly repayment | $3,749.59 | $3,841.03 |
| Interest rate | 11.51% | 14% p.a. |
| Interest (GIC) paid | $9,990 | $12,185 |
| Fees | $0 | $0 |
| Total cost before tax | $9,990 | $12,185 |
| Tax saved by deductions | $0 | $3,046 |
| After-tax cost | $9,990 | $9,139 |
GIC is not tax deductible. Loan interest and fees are deducted at 25%.
Show chart data
| Month | ATO plan | Business loan |
|---|---|---|
| 0 | $0 | $0 |
| 3 | $2,226 | $2,023 |
| 6 | $4,189 | $3,812 |
| 9 | $5,881 | $5,359 |
| 12 | $7,294 | $6,654 |
| 15 | $8,420 | $7,689 |
| 18 | $9,251 | $8,454 |
| 21 | $9,777 | $8,941 |
| 24 | $9,990 | $9,139 |
No credit-score impact to ask. Any loan is subject to lender approval.
General information only, not tax, legal or financial advice. Results are estimates that assume equal monthly repayments, GIC at 11.51% for the whole term (the October to December 2026 rate), no missed payments and tax relief at the rate shown. GIC changes every quarter. Speak to your accountant before deciding. Lending is subject to lender approval. Blackcube Capital is a commercial credit facilitator, not a lender.
If you default on an ATO payment plan
A payment plan only protects you while you keep to it. If a plan defaults:
- The plan ends and the full balance is due. The whole overdue amount becomes payable straight away, and GIC keeps accruing. ATO (opens ato.gov.au in a new tab)
- Garnishee notices. The ATO can require your bank, customers or others who owe you money to pay it directly. ATO (opens ato.gov.au in a new tab)
- Director penalty notices. Directors can become personally liable for the company's unpaid PAYG withholding, GST and super guarantee charge. ATO (opens ato.gov.au in a new tab)
- Disclosure to credit bureaus. A business with $100,000 or more overdue for over 90 days that is not engaging with the ATO can have the debt reported, which lenders and suppliers can see. ATO (opens ato.gov.au in a new tab)
- Fewer options next time. Recent defaults can stop you setting up a new plan online or qualifying for an interest-free plan. ATO (opens ato.gov.au in a new tab)
Key facts
- Current GIC rate: 11.51% a year (0.03153425% a day) for October to December 2026, compounding daily on the overdue balance. ATO (opens ato.gov.au in a new tab)
- GIC is not deductible: GIC and SIC incurred on or after 1 July 2025 can't be claimed as a deduction, whatever year the debt relates to. ATO (opens ato.gov.au in a new tab)
- How GIC is set: The 90-day bank accepted bill yield plus 7 percentage points, reviewed quarterly. ATO (opens ato.gov.au in a new tab)
- Company tax rates (2025–26): 25% for base rate entities, 30% otherwise. ATO (opens ato.gov.au in a new tab)
- Credit bureau disclosure threshold: $100,000 or more overdue by more than 90 days, where the business is not engaging with the ATO. ATO (opens ato.gov.au in a new tab)
- Interest-free plans: Some businesses with turnover under $2 million and activity statement debt of $50,000 or less qualify. ATO (opens ato.gov.au in a new tab)
Worked example: $80,000 over 24 months
A base rate company owes the ATO $80,000 and can repay it over 24 months. It compares an ATO payment plan at the current GIC of 11.51% with a 24-month business loan at 14% a year and no fees.
- ATO payment plan: about $3,750 a month and $9,990 in GIC. None of it is deductible, so the after-tax cost is $9,990.
- Business loan: about $3,841 a month and $12,185 in interest. At 25% tax the deduction is worth $3,046, so the after-tax cost is $9,139.
- Result: Refinancing saves you about $852 after tax. The loan costs more each month, but less overall after tax.
The break-even loan rate here is about 15.2%. At 18% the same loan would cost about $1,900 more than the ATO plan after tax, so the rate you are offered decides the answer. Fees push the break-even rate down.
How the calculator works
ATO payment plan
GIC is charged at the annual rate divided by 365, compounding daily on the reducing balance. The calculator assumes equal monthly instalments that clear the debt and the GIC by the end of the term, and that the current quarter's rate applies throughout. In practice GIC moves each quarter. Because GIC is not deductible, its after-tax cost is the full amount.
Business loan
A standard principal and interest loan for the same amount with monthly repayments. Establishment and broker fees are treated as paid at settlement and deducted evenly over the loan term. The after-tax cost is interest plus fees, less tax saved at your rate: 25% for a base rate company, 30% for other companies, or the marginal rate plus the 2% Medicare levy for sole traders, partners and trust beneficiaries.
Break-even rate
The highest loan interest rate, with your fees and loan term, at which the loan still costs no more after tax than the ATO plan. If the fees alone cost more than the GIC, there is no break-even rate.
When refinancing ATO debt does and doesn't make sense
Refinancing tends to work when the loan rate is below the break-even rate, fees are modest and the business can comfortably carry the repayments. It can also help if a defaulted plan or a disclosure notice is the bigger risk.
It usually doesn't make sense if you qualify for an interest-free ATO plan, if the only loans on offer are well above the break-even rate, or if a longer loan term is needed just to make the repayments fit. A loan replaces one debt with another; it does not reduce what you owe.
For more on how lenders look at tax debt, read can you get a business loan with ATO debt? and our page on business funding for ATO debt. To compare other offers, use the business loan calculator or see how business loan refinancing works.
Frequently asked questions
Is ATO interest tax deductible?
No, not any more. General interest charge (GIC) and shortfall interest charge (SIC) incurred on or after 1 July 2025 can't be claimed as a tax deduction, even when the debt relates to an earlier year. GIC incurred before 1 July 2025 remains deductible for the 2024–25 and earlier income years.
What is the current ATO GIC rate?
The general interest charge is 11.51% a year for October to December 2026, or 0.03153425% a day. The ATO resets it every quarter at the 90-day bank accepted bill yield plus 7 percentage points, and it compounds daily on the overdue balance.
Is it cheaper to pay off ATO debt with a business loan?
Sometimes. Because GIC is no longer deductible and business loan interest usually is, a loan can cost less after tax even at a higher headline rate. For a base rate company taxed at 25%, a 24-month loan with no fees breaks even at about 15.2% a year against the current GIC. Fees, a longer term or a higher rate can make the ATO plan cheaper, and an interest-free ATO plan is very hard to beat.
Can I get a business loan with an ATO debt?
Often, yes, if the business is trading well. Many non-bank lenders will consider ATO debt, especially when a payment plan is in place and being kept. They look at revenue, bank statement conduct, the size of the debt against turnover and whether the business can carry the new repayments. Approval is never guaranteed.
What happens if I default on an ATO payment plan?
The whole overdue balance becomes payable straight away and the ATO may take firmer action. That can include garnishee notices to your bank or customers, director penalty notices that make directors personally liable for unpaid PAYG withholding, GST and super guarantee charge, and reporting the debt to credit reporting bureaus. Contact the ATO early if you are likely to miss a payment.
Will the ATO report my tax debt to a credit bureau?
Only if your business meets all the criteria. It has an ABN, at least $100,000 is overdue by more than 90 days, and you are not engaging with the ATO, for example by keeping to a payment plan. The ATO sends a notice of intent first and gives you 28 days to act.
Is business loan interest deductible if I use the loan to pay the ATO?
Usually, when a business borrows to pay business tax debts such as GST, PAYG withholding or company tax. Borrowing costs such as establishment fees are generally deducted over the loan term or five years, whichever is shorter. It depends on how the money is used and your circumstances, so confirm with your accountant. The calculator lets you switch deductibility off.
Does the ATO offer interest-free payment plans?
Yes, for some small businesses. A business with turnover under $2 million and activity statement debt of $50,000 or less, overdue for up to 12 months, may get a 12-month interest-free plan if it has a good payment history, can't get finance through normal business channels and can show it is viable. If you qualify, it will almost always beat a loan.
Rates last checked against ato.gov.au on 28 October 2026. General information only, not tax, legal or financial advice. Calculator results are estimates based on the inputs you enter and the published ATO rates shown, and actual GIC, tax and loan costs will differ. Speak to your accountant before deciding how to manage a tax debt. Any loan is subject to lender approval and no saving is guaranteed. Blackcube Capital is a commercial credit facilitator, not a lender.