ATO debt options: every way through, ranked honestly

Why does the order of options matter?

When you’re under pressure, the first person you speak to often decides which path you take. If that’s an insolvency or “pre-insolvency” business, the conversation tends to start with restructuring or liquidation. If it’s a lender, it starts with a loan. Neither is necessarily wrong — but the cheapest, least disruptive options sit in between, and they’re often skipped.

So here they all are, roughly in order of cost and how much control you keep. We’re a funder, and funding sits in the middle of this list, not the top.

Every option, ranked

#	Option	Cost to you	Who keeps control	Best for
1	Pay in full	The debt (GIC stops)	You	Cash is available, perhaps from reserves or a sale
2	ATO payment plan	GIC compounding daily (not deductible from 1 July 2025)	You, within the ATO’s terms	Debts under $200,000 you can clear in a reasonable time
3	Interest-free ATO plan	None if met — GIC remitted	You	Turnover under $2m, activity statement debt of $50,000 or less, can’t get finance
4	Secured ATO plan	GIC continues; property or bank guarantee offered	You	Larger debts, where you want time from the ATO itself
5	GIC remission request	Free to ask	You	Debts where interest built up due to circumstances outside your control
6	Hardship help and deferrals	Free to ask	You	Short-term disruption, disasters, illness
7	Funding (loan)	The loan’s total cost; interest may be deductible	You	Viable businesses; lockdown DPNs; plan refused or defaulted
8	Small business restructuring	Practitioner fees plus a plan paying creditors	You, with a practitioner overseeing	Liabilities under $1m, entitlements and lodgements current
9	Voluntary administration	Administrator’s fees; outcome uncertain	The administrator	Larger or complex companies needing a deed
10	Liquidation	Liquidator’s fees, the company’s assets, possible director consequences	The liquidator	Businesses that genuinely can’t continue

Every row links to its own page in this section or in before you call an insolvency firm.

Which taxes change the order?

Not all ATO debts are equal. GST, PAYG withholding and super guarantee charge are covered by the director penalty regime, which means directors can become personally liable for them. Income tax isn’t. That has two practical effects:

• It often makes sense to clear or fund the director-penalty taxes first and put income tax on a plan.
• If a lockdown applies — GST or PAYG withholding reported more than three months late — restructuring, administration and liquidation don’t remove the personal liability. Only payment does. That moves funding higher up the list for many directors.

Our director penalties section explains the rules.

What does each option need from you?

• Payment plans need lodgements up to date and instalments you can genuinely meet alongside new tax. See ATO payment plans for business.
• The interest-free plan needs every one of the ATO’s criteria met, including that you can’t obtain finance. See interest-free ATO payment plans.
• Remission needs a clear explanation and evidence of why the interest built up. See GIC remission.
• Funding needs security or serviceability and a believable repayment plan. See tax debt loans.
• Restructuring needs liabilities under $1 million, entitlements and lodgements current, and no use of restructuring or simplified liquidation by the company or directors in the past 7 years.

Who should you call for each?

Option	Who to call
Payment plan, deferral, remission	The ATO directly, or your registered tax agent
Free, independent advice	Small Business Debt Helpline, 1800 413 828
Funding	A lender or funder you’ve checked — like us, with no credit check to enquire
Restructuring, administration, liquidation	A registered liquidator (check the ASIC professional registers)
Anyone negotiating with the ATO for a fee	Must be a registered tax agent (check the TPB register)

The free help box further down this page has the numbers and links.

What do people most often get wrong about their options?

From the conversations we have every week, a few misunderstandings come up again and again:

• “A payment plan protects me from director penalties.” It doesn’t remit them. Only the four outcomes in the director penalty rules do — and for lockdown amounts, only payment.
• “The ATO will forgive the GST if I explain.” GST and PAYG withholding can’t be released, and companies can’t apply for release at all. Interest and penalties may be remitted.
• “Borrowing is always more expensive than the ATO.” Not necessarily, now that GIC from 1 July 2025 isn’t deductible. Compare real numbers.
• “Liquidation makes it all go away.” Lockdown penalties and personal guarantees survive it.
• “I need a specialist to talk to the ATO.” You can call the ATO yourself, or ask your accountant.

How do you decide quickly when a deadline is close?

If a notice has arrived, use this order: confirm the deadline; identify which amounts carry director risk and whether any are locked down; check whether an ATO arrangement can be in place in time; and if not, start funding conversations straight away. When in doubt, call the Small Business Debt Helpline (1800 413 828) for a free, neutral second view.

Not sure where you fit?

Our ATO debt options checker asks about the debt type, size, notices, property and trading, then gives you a calm, ranked list of realistic options — including the free ones where we don’t make a cent. If funding comes out near the top, you can see if you qualify in about a minute: no credit check to enquire, no spraying your details across lenders, and a real person who’ll call you back. Accurate answers make the result — and the call — far more useful.