After lodging their annual tax return many self-employed Australian Businesses may have a tax debt to pay to the Australian Tax Office. Whilst most small businesses make regular quarterly payments throughout the year sometimes these instalments are not enough.
Most tax debts are quite small and individuals/businesses have set funds aside to pay the ATO when due. However when the tax debt is unexpectedly large (or unexpected) some small business owners and property investors may either need to enter into a repayment plan with the ATO or borrow from a lender.
There are a number of reasons as to why you may incur a tax debt including:
Whilst lenders are generally happy to allow debt consolidation for credit cards & personal loans they’re less likely when it’s to to pay back the tax man. If it’s due to a mistake by your accountant or you haven’t set aside funds after a capital gain a mainstream lender may be willing to help.
If however it’s due to failing to set aside money or lodge statements with the ATO a specialist lender will likely be required. Specialist lenders charge slightly higher rates of interest than the major banks (although the rate of interest will still likely be lower than the ATO General Interest Charge Rates . The benefit though is that they may be willing to lend for purposes that the banks aren’t.
In order to apply you’ll need to have sufficient equity in a property. As a general rule the maximum a specialist lender will lend to pay out a tax debt is 85% of a property’s value (including any existing loans secured by the property).
If you need to pay out your tax debt and are considering using your home equity to do so please get in contact with us about our obligation free mortgage broker service.