Can ATO debt be consolidated with other debts?
Short answer
Yes, through a loan, not through the ATO. A consolidation loan or home loan refinance can pay out your ATO debt alongside credit cards, personal loans or business finance, leaving one repayment. The ATO itself does not consolidate its debt with anyone else's, though one ATO payment plan can cover several ATO accounts. Whether consolidation helps depends on the rate, the security and your ability to keep up.
How consolidating ATO debt actually works
A consolidation loan is an ordinary loan whose proceeds are used to pay out several existing debts. Lenders typically insist on paying each creditor directly at settlement, including the ATO, using your payment reference number. After settlement, the ATO debt is gone and you owe the lender instead.
Consolidation comes in three forms, with different risks:
- Home loan refinance or top-up. Usually the lowest rate, but it secures everything on your home. Can I refinance to pay ATO debt covers what lenders look for.
- Unsecured personal loan. No security, but rates depend heavily on your credit file and can approach or exceed the ATO's 11.43% general interest charge.
- Business debt consolidation. Often needs a director's guarantee, which quietly turns a company debt into a personal one.
What lenders typically look at
Lenders treat the ATO debt like any other liability being refinanced, with two extra checks. They usually want to see that returns and BAS are lodged and the payout figure is confirmed on an ATO statement, and they look at whether the tax debt is a one-off or a pattern. A history of rolling BAS debt suggests the consolidated loan will soon have a new ATO debt sitting next to it.
A business debt that has reached the ATO's credit reporting threshold ($100,000 or more, more than 90 days overdue, not engaging) makes consolidation much harder, because the listing is on the same credit file the lender reads. Getting a payment plan in place before you apply stops disclosure and shows the debt is managed. The ATO debt and home loans guide has a lender-by-lender comparison.
Juggling ATO debt with everything else?
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When consolidation helps, and when it hurts
It tends to help when the new rate is clearly lower than the blended rate of what it replaces, the fees are modest, the term is not so long that total interest balloons, and you can comfortably make the single repayment. It tends to hurt when it moves unsecured debt onto your home, when the loan is priced above GIC, or when it removes the pressure without fixing the cash flow that created the debts.
Compare it against the unsecured alternatives too: a payment plan with a GIC remission request, and for individuals with wider debt problems, a free financial counsellor. Loan vs payment plan sets out the cost comparison. This site does not arrange finance or recommend lenders.
What to do next
- List every debt with its balance, rate and whether it is secured, and add the ATO debt at 11.43% non-deductible.
- Get your ATO payout figure and lodgement status confirmed so any lender has an accurate picture.
- Ask a licensed broker or financial counsellor to compare a consolidation against a payment plan before committing.
Related questions
Can one ATO payment plan cover all my ATO debts?
Usually yes. A single plan can cover income tax, activity statement and other ATO accounts, and the ATO generally prefers one plan to several. That is the ATO's own version of consolidation, and it needs no lender. This page explains how it works.
Does a debt agreement consolidate tax debt?
A Part 9 debt agreement or personal insolvency agreement can include tax debt alongside other unsecured debts, with a single arrangement binding all creditors if they vote for it. It is a formal insolvency step with credit and other consequences, not a loan, and it belongs in a conversation with a free financial counsellor or a registered practitioner.
Juggling ATO debt with everything else?
See whether one plan or one loan is the better fit before you sign. Free and confidential.
Get help nowMore questions: 10 Paying, loans and home loans questions answered · Full guide: Tax debt & home loans