A Strategic Approach to Manage ATO Obligations

Do you have clients with ATO Debt? 

In the dynamic landscape of Australian taxation, accountants often navigate the intricacies of client financial obligations to the Australian Taxation Office (ATO). With deadlines looming and statutory requirements intensifying to unprecedented levels, ensuring clients have the necessary liquidity to meet their tax obligations is paramount.

​In this context, a more flexible, unsecured loan can serve as a strategic financial tool, providing clients with the agility needed to manage their tax liabilities effectively while maintaining their cash flow. ​

​What's Changed? 

ATO Debt & General Interest Charges (GIC) 
There is significant changes coming to how ATO Debt is managed: 

• April rate will be 11.17%, typical 30% deposit 
• From July 1, GIR will be non deductible, ATO website here 
• Feedback from industry is its getting harder to obtain and get remitted 
• ATO have $50+B in collectable debt post covid - "It's money that could be benefitting all Australians," ATO Commissioner Rob Heferen said. 

Understanding the Need for Flexible Financing 
 
As tax obligations and payment compliance are at their most intense, it is essential to equip clients with financing options that adapt to their specific circumstances. Unsecured loans—where no collateral is required—offer several advantages: 

1. Quick Access to Capital: Traditional financing often involves lengthy approval processes and strict collateral requirements. In contrast, unsecured loans can be processed rapidly, allowing clients to access funds swiftly when facing imminent tax payments. 
2. Minimal Impact on Cash Flow: Since these loans don’t require collateral, clients can retain their assets for other operational needs. This flexibility allows businesses to focus on growth initiatives while meeting their tax commitments. 
3. Variety of Repayment Options: Many lenders offer customizable repayment plans for unsecured loans. This flexibility enables clients to choose a schedule that aligns with their cash flow and revenue cycles, making it easier to manage repayments comfortably. 

Risk Mitigation and Strategic Use 

While unsecured loans represent a valuable tool for meeting tax obligations, accountants should also advise clients on prudent usage to mitigate risks: 

1. Assessing Financial Health: Accountants should conduct a thorough assessment of their clients’ financial health before recommending unsecured loans. Understanding cash flow patterns, existing liabilities, and overall debt levels is critical in making an informed decision. 
2. Loan Terms and Interest Rates: Given the non-collateralised nature of these loans, interest rates may be higher than those of secured loans. Clients should shop around, comparing terms and rates from various lenders, to ensure they secure the most favorable conditions. 
3. Integration into Financial Planning: It’s vital to integrate the repayment of any unsecured loan into the broader financial plan. This includes forecasting future earnings, anticipated changes in revenue, and aligning loan repayments with cash inflows. 
4. Communication with the ATO: Accountants should maintain a dialogue with the ATO on behalf of their clients. If a client is unable to meet payment deadlines, discussing payment plans or hardship arrangements with the tax office can often yield advantageous outcomes. 

 
Tax payment headaches... 

“ATO payment arrangement terms don’t work for clients.  They often default when the very next tax instalments is not paid on-time and in full.  Taxpay’s rotating arrangement offers clients a realistic way of getting back on track with their tax burden.” 

“Most financiers run a mile when clients tell them the purpose of the loan is to repay debt!  This will be a popular offering.” 

More value add services... 

"As trusted advisor, clients expect us to offer innovative ways to help with real life business headaches.  This is a really clever value-add we can provide without the need to dig up endless reports for the banks” 

Chris Bray, Director,  
Bray Chan, 
Australia 

Enter TaxPay a new way forward for ATO Debt 

• Easy. All digital experience. 

• Unsecured. Fitting neatly with existing or future secured without the ATO risk.  

• Flexible. Bringing unrivalled flexibility, including evergreen facilities, and repayment holiday options 

 
Why introduce the service to clients: 

• Clients need a solution, enhance your client relationship 

• Save time on hold to ATO and risk non remit and face no deduction 

• We cover your costs (service fee, not commission) to provide documents 

• Drive accounting services around cashflow, monthly reporting 

• Optionally you can charge ‘application or handling fees’ 

• And more 

 
Why partner with Apxium  

• Provider to accountants for 8+ years 

• $3B of fees under management via Collect solution 

• $10+m in TaxPay loans already settled, $9m in application today 

 
Borrowers are using Tax Pay in multiple ways to control and enhance their cash flow options from paying debt off, smoothing payments to using Tax Pay for large ATO initial payments.   
 
A couple of simple ‘how to guide’ videos; 

• for Accountants 

• for your Clients 

Eligibility 
​
TaxPay is designed for good business looking to smooth out ATO obligations.  It is not designed as last resort financing and eligibility criteria is a key component to understand: 

​Commercials 

• All settlements direct to ATO. 
• Loan Interest; Flat fee 9%. 12 month term* (*available to request longer) 
• No set up cost. 
• Unsecured, personally guaranteed, business only. 
• Evergreen, fully revolving loan facility. (subject to high level annual review). 
• Re-Payment Holiday function; max. 3 on a rolling 12-month period from first draw.  
• All Drawdowns; initial payment = monthly principal, full interest payment, doc. fee. 
• No penalties for early repayment – all full months interest paid is reimbursed.  

 
Fees (ex. GST) 

• Doc $100 
• Credit card 1.25% +GST (Visa/Mastercard) 
• Dishonor $75 
• Chargeback $100 
• Overdue penalty interest rate = Advance rate + 4%  

 
Repayments via Direct Debit, EFT or Credit card (do you have clients that want points?) 

Summary 

Conclusion: A Strategic Tool in Your Accounting Arsenal 

For accountants guiding clients through their tax obligations to the ATO, flexible, unsecured loans offer a crucial lifeline. This financing option, when used strategically and judiciously, can empower clients to navigate challenging tax situations without compromising their operational capabilities. By carefully evaluating client needs, comparing loan terms, and integrating loan repayments into overall financial plans, accountants can help ensure their clients maintain healthy cash flows while meeting their tax commitments.  

As the regulatory landscape continues to evolve and the pressures of fiscal responsibilities increase, embracing innovative financing solutions will be vital in delivering comprehensive support to clients—a pivotal role for accountants in today’s economic climate. 

Make TaxPay a part of your firms advisory toolkit today. 

Click here to book a time to discuss TaxPay with Apxium’s Ned Appleton:  Book here. 

A huge thanks to our friends at Apxium for providing us with this article and sharing their insights. Want to learn more? Don't hesitate to reach out to us.

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