📅 From 1 July 2025: ATO Interest Charges Will No Longer Be Tax Deductible

Why ATO Debt Should Be a Top Financial Priority for Our Clients

As a broker, staying ahead of regulatory changes is essential to delivering timely, strategic advice. Right now, there’s a critical opportunity to help your clients – especially those with unpaid ATO debt – make informed decisions before a major change takes effect.

📅 From 1 July 2025: ATO Interest Charges Will No Longer Be Tax Deductible

The Australian Government is removing the tax deductibility of the General Interest Charge (GIC) on ATO debt. While this may sound like a minor adjustment, it could have a significant financial impact on businesses carrying unpaid tax obligations.

Until now, businesses could deduct GIC as an expense, effectively reducing the interest cost by up to 25%. From 1 July 2025, this benefit will disappear, leaving clients to absorb the full cost of compounding ATO interest – currently sitting at 11.17% (and subject to change).

For many small businesses, this change could mean thousands in additional annual costs – making it more important than ever to manage ATO debt proactively.

Why Many SMEs Treat the ATO Like a Lender – and Why That’s Risky

It’s not uncommon for businesses to prioritise staff wages, supplier payments, and other short-term expenses over tax obligations. The ATO is often seen as the most lenient creditor – especially during and after COVID-19, when payment flexibility increased.

But this mindset has consequences. Unpaid ATO debt across small businesses has ballooned to $35.2 billion as of the end of 2024. And with compounding daily interest, even a $50,000 tax debt can accrue over $5,500 in interest per year.

Once the deductibility ends, the full interest charge will directly affect the bottom line – no offsets, no relief.

ATO Debt Also Impacts Creditworthiness

Beyond the rising cost, tax debt can also negatively impact a business’s ability to access credit.

Banks – and even many non-bank lenders – view significant ATO debt as a red flag. When tax liabilities exceed 8–10% of annual turnover, it can limit loan approvals, delay funding, or increase interest rates.

This makes early intervention critical. By addressing ATO debt now, brokers can help their clients protect both their short-term cash flow and long-term financing potential.

How Brokers Can Support Clients Ahead of the Deadline

At Doma Finance, we believe brokers play a key role in educating and empowering business clients. Here’s how you can help:

✅ Start the conversation early

Many business owners are unaware of the upcoming deductibility change. Informing them now could save them thousands later.

✅ Explore refinancing options

Consider refinancing ATO debt through a business loan that offers:

• Fixed or lower interest rates

• Structured repayment schedules aligned with cash flow

• Tax-deductible interest payments (unlike the GIC after July 2025)

✅ Work with the ATO

Assist your clients in establishing formal payment plans. While interest still applies, it shows a willingness to meet obligations and can help avoid further enforcement actions.

✅ Compare repayment structures

ATO payment plans typically run 18–24 months. Business loans through Doma Finance’s lending partners may offer 36-month terms or longer, easing monthly cash flow pressures.

✅ Unlock working capital

Consider options like:

• Invoice finance to release funds from outstanding invoices

• Asset-backed lending using equipment or vehicles to secure better terms

What Brokers Should Do Now

With just weeks left before the new financial year begins, brokers should:

• Audit their client portfolio – Identify clients with outstanding ATO debts

• Calculate potential impacts – Assess how much the deductibility change will cost

• Review payment strategies – Ensure repayment plans are realistic and achievable

• Present solutions – From refinancing to restructuring cash flow, provide tailored options

Partner with Doma Finance for Better Outcomes

With access to 40+ lenders and a deep understanding of the SME landscape, Doma Finance helps brokers source the right funding solutions for every client situation. Whether it’s refinancing ATO debt, unlocking capital, or navigating complex financial scenarios, we’re here to help.

The window to act is closing. By helping your clients resolve tax debt now, you’ll not only save them from rising costs but also strengthen your broker-client relationship through proactive, high-impact advice.

Ready to help your clients get ahead of the ATO debt curve?
Contact the team at Doma Finance today – let’s build better financial futures, together.