A payment plan can manage timing, but the business still needs a sustainable cash-flow plan.

Businesses may already be on an ATO payment plan when they explore external funding. A future credit assessment should consider the payment plan, the underlying liability and whether refinancing or retaining the plan produces a stronger operating position.

What matters

Start with the commercial reality.

Funding should address a defined business need and sit within a credible plan for the company after the facility is advanced.

Know the plan

Document the remaining balance, instalments, due dates, general interest charge and any previous defaults.

Compare cash flows

Assess the monthly burden of the existing plan against the proposed commercial facility and other obligations.

Keep lodgments current

A funding discussion is stronger when the company can demonstrate current reporting and a plan for future tax obligations.

Payment plans are an ATO arrangement

The ATO provides businesses with online services to manage accounts and, where eligible, organise payment plans. Businesses should confirm their current options directly with the ATO or their registered tax adviser.

External finance is a separate decision

A commercial lender assesses credit independently. The fact that a company has, or could obtain, an ATO payment plan does not itself determine whether external funding is appropriate.

Model the after-funding position

The key question is what the business looks like after the tax balance is addressed: cash on hand, working-capital headroom, current tax obligations, supplier terms and the ability to meet the proposed facility.

Prior defaults require explanation

Repeated payment-plan defaults can indicate a deeper cash-flow problem. Management should explain what has changed and why the new structure is expected to be sustainable.

Official sources & further reading

General information only. This page does not constitute legal, tax, financial or credit advice. SME Capital Partners is in pre-launch and is not currently offering or approving credit through this website.