An ATO audit or amended assessment left you with a big bill: how to fund it

What’s in an amended assessment bill?

When an ATO audit or review finds that more tax was owed, the result is usually an amended assessment. The bill commonly has three parts:

1. The extra tax (sometimes called the shortfall or primary tax).
2. Shortfall interest charge (SIC), which covers the period from when the tax was first due to the day before the amended assessment issued.
3. Administrative penalties, if the ATO decides a false or misleading statement was made or reasonable care wasn’t taken. The penalty depends on the behaviour, and voluntary disclosure before an audit can reduce it significantly.

The amended assessment sets a new due date. After that, the general interest charge (GIC) applies to anything unpaid, compounding daily. Since 1 July 2025, neither SIC nor GIC is tax deductible. See ATO interest is no longer deductible.

Audit bills are often large and arrive all at once. A business that pays its BAS on time can still end up owing hundreds of thousands of dollars from a single review of past years.

Can you dispute it, and do you still have to pay?

If you or your adviser think the ATO got it wrong, you can object. Time limits apply: generally two years from the notice for individuals and small businesses, and four years for most others. Late objections can be accepted in some cases.

The key point is that objecting doesn’t stop the debt being payable. The ATO can still take recovery action, and GIC keeps running on what’s unpaid. If the objection succeeds, what you paid is refunded with interest.

The ATO does have a published approach for disputed debts, often called the 50/50 arrangement. If you pay at least 50% of the disputed tax, the ATO generally won’t pursue the rest while the dispute continues, and it may partly remit interest on the unpaid part. Where the risk to revenue is low, the ATO may defer recovery even without payment. Where it’s high, it may ask for security or more. Your adviser can tell you how it’s likely to treat your case.

Your options for paying an audit bill

Option	Suits	Watch out for
Pay in full from cash	Strong balance sheet	Cash flow left for trading
50/50 arrangement while objecting	A genuine dispute	GIC on the unpaid half if you lose
ATO payment plan	Smaller bills, no dispute	GIC throughout, plan conditions
Business loan for the full amount	Larger bills, want it finished	Loan costs and repayments
Business loan for the 50% payment	Disputing and short of cash	Still owe the rest if the dispute fails
Settlement with the ATO	Complex disputes	Needs advice; takes time

Many businesses fund the 50% payment so they can object without recovery action hanging over them. If the objection succeeds, the refund can go straight towards repaying the loan.

How does funding an audit bill work?

Property-secured. For larger amended assessments, a first or second mortgage over residential or commercial property is the usual route. Secured loans run from $20,000 to $5,000,000. Where it’s arranged at settlement, funds can be paid straight to the ATO. See funding for large ATO debts.

Unsecured. For smaller bills, unsecured loans are typically $5,000 to $500,000 and sized on bank statements.

Lenders will want to see the amended assessment notice and your ATO statement. They’ll also want to know whether you’re objecting, and what happens to the loan if you win and receive a refund.

An illustrative example

A Melbourne import business is audited on how it treated GST on certain imported goods over three years. The amended assessments total $410,000: $330,000 of tax, plus shortfall interest and a penalty. Its tax adviser believes about half the adjustment is wrong and lodges an objection. The business takes a second mortgage over a commercial property to pay the undisputed portion plus 50% of the disputed tax, paid directly to the ATO. Recovery of the rest is deferred while the objection runs. Eight months later the objection partly succeeds, and the refund is used to reduce the loan.

This example is illustrative and simplified, not a real client.

Before you borrow

• Get tax advice on the dispute first. Whether to object, and on what grounds, is a question for your tax agent or a tax lawyer, not a lender.
• Ask about penalty and interest remission. The ATO can remit SIC, GIC and penalties in some circumstances. See GIC remission.
• Plan for both outcomes. Make sure the loan works whether the objection wins or loses.

Facing an ATO audit bill?

If an amended assessment has left you with a bill your cash flow can’t absorb, see if you qualify for funding to pay the ATO. There’s no credit check to enquire. One team handles your file, and a specialist will talk you through paying in full, paying 50% while you object, or a plan.