Short answer: Lodge your BAS on time even if you can't pay it: the failure-to-lodge penalty is separate from the debt and can reach $1,820 per statement for a small business. Then contact the ATO before the due date. Debts of $200,000 or less can go on a self-serve payment plan, but the general interest charge keeps compounding daily.
Lodge on time, even if you can't pay
Lodging and paying are two separate obligations, and missing the first costs money on top of the debt. The failure-to-lodge penalty is 1 penalty unit for every 28 days, or part of 28 days, that a statement is late, up to 5 units (ATO).
| Lodgment due | Penalty unit | Maximum for a small business, per statement |
|---|---|---|
| Before 1 July 2026 | $330 | $1,650 |
| On or after 1 July 2026 | $364 | $1,820 |
The amount is doubled for medium withholders and multiplied by five for large ones. A business that falls behind on four quarterly statements could be looking at more than $7,000 in penalties before a dollar of tax is counted.
Lodging on time avoids all of that, and it turns the debt into a known number. A lodged, unpaid BAS is a debt you can plan around. An unlodged one is a debt, a penalty and an open question.
Contact the ATO before the due date
This is the ATO’s own advice: if you can’t pay, lodge on time, get in touch before the due date and ask about a payment plan (ATO). Before matters. A business that calls on the 20th with a plan is in a very different position from one the ATO has to chase in the following quarter.
Have three things ready when you call: the amount owing, what you can realistically pay each fortnight or month, and when the cash position improves. If you use a registered tax or BAS agent, they can make the call for you.
If you are already more than one quarter behind, get every outstanding statement lodged before you ask for anything. The ATO can only arrange a plan around a debt it can see, and every month a statement stays unlodged adds to the penalty. Lodging the backlog is often a weekend’s work with your bookkeeper, and it is the step that opens every other option, including a refinance to a bank later.
How ATO payment plans work
If your business owes $200,000 or less, you can usually set up a payment plan yourself online, without speaking to anyone (ATO). A few rules catch people out.
- One online plan at a time. If you already have one running, the next arrangement has to be made with the ATO directly.
- Activity statement and income tax debts are separate. They need separate plans.
- Interest keeps running. The general interest charge accrues for the whole life of the plan.
- Default is expensive. Miss a payment and the full overdue balance can become payable immediately, not just the missed instalment.
That last rule is why the repayment amount matters more than anything else. Agree to an amount the business can actually meet, with room for a slow month, even if the plan runs longer as a result.
What waiting costs: the general interest charge
Any unpaid BAS amount attracts the general interest charge (GIC), which compounds daily. For October to December 2026 the annual rate is 11.51% (ATO). It applies during a payment plan as well, and since 1 July 2025 it is no longer tax deductible.
Take a $40,000 BAS debt carried for a full year as an example. If the rate held at 11.51% and compounded daily, the GIC would come to roughly $4,900, none of which you could claim back at tax time. The rate is reset each quarter, so the real figure will move, but the order of magnitude is the point.
When you compare that with a loan, compare like with like: the total cost of each over the same period, including every fee, not a headline figure against another headline figure. Ask any lender for all costs in writing before you sign.
That is the number to compare against any other way of clearing the debt. Sometimes the plan still wins; sometimes it doesn’t. Your accountant can run it on your actual figures.
The credit card option ends on 30 November 2026
For years, plenty of owners covered a BAS by putting it on a card and paying the card down over the next few months. That route is closing. The ATO stops accepting credit card payments after 30 November 2026.
It is worth being clear about what the card was doing. It was never a way to pay the BAS; it was a short, unsecured loan with a different label, and it bought the business a few weeks. The need for those weeks hasn’t gone anywhere, so the question is what fills it now: a payment plan, a line of credit or a loan arranged before the due date rather than on it.
If that was your fallback, you need a new one before the next quarter falls due. Our guide to the end of ATO credit card payments covers what changes and the alternatives.
Payment plan or loan? A decision table
A payment plan costs nothing to set up and keeps your property out of it. For a first-time, modest debt it is usually the right answer. A loan starts to make sense when the plan can’t do the job.
| Your situation | Usually better | Why |
|---|---|---|
| First time behind, modest debt, repayments affordable | Payment plan | No setup cost, no security, no lender |
| Debt over $200,000 | Speak to the ATO directly, or a loan | It is outside the self-serve limit |
| A plan has already defaulted | Loan | The full overdue balance can be payable now |
| Garnishee or director penalty notice issued | Loan, urgently | The timetable is no longer yours |
| Debt is blocking a refinance, tender, licence or sale | Loan | Being blocked costs more than the finance |
| The business can’t afford a plan or a loan | Accountant or insolvency advice | Neither fixes a business that can’t pay its way |
GST and PAYG withholding sit inside most BAS debts, and directors can be personally liable for both through a director penalty notice. If the ATO has already started collecting from your bank or customers, read our guide to the ATO garnishee notice first. The fuller comparison is in getting a business loan with ATO debt.
Which loan clears a BAS debt
- You own property: a second mortgage, a first mortgage if the property is unencumbered, or a caveat loan in Victoria. $20,000 to $5M, funded in as little as 24 hours, no financials needed, and ATO debt and overdue lodgements don’t stop it.
- No property, steady trading: a cash-flow loan assessed on your bank statements. You need an active ABN and 6+ months trading, and some are funded in as little as 2 hours after approval.
Whichever lane fits, borrow for the debt plus the next quarter’s shortfall if one is coming, or you will be reading this page again in three months. Our page on loans for ATO tax debt sets out the options in more detail.
What to have ready
- The ATO balance, from your statement of account or the portal, including interest already charged.
- Any notice you have received, such as a garnishee or a director penalty notice. Mention it first, not last.
- Whether a plan exists, and whether it is current or has defaulted.
- Property details if you own one: the address, what is owing on it and who is on the title.
And if the BAS is short because the business is losing money rather than waiting on money, a loan is the wrong answer. Fix the cause first, with your accountant. A loan that clears this quarter’s BAS without a plan for next quarter’s is just a more expensive way of being behind.
See where you stand before the due date
The best time to sort a BAS you can’t pay is the week before it is due, when every option is still open. Our 60-second eligibility check makes no credit enquiry and shows whether a loan beats the payment plan in your case, so you can call the ATO already knowing your fallback.
Frequently asked questions
What happens if I lodge my BAS but don't pay it?
The unpaid amount becomes a debt that attracts the general interest charge daily. You avoid the failure-to-lodge penalty, and the ATO has the real figure when you ask for a plan.
Can I set up a BAS payment plan online?
Yes, if you owe $200,000 or less. Activity statement and income tax debts need separate plans, and you can have only one online plan at a time.
Is the general interest charge tax deductible?
Not since 1 July 2025. That makes carrying an ATO debt noticeably more expensive than it used to be.
Can I still pay my BAS with a credit card?
Only until 30 November 2026. The ATO stops accepting credit cards after that date.
Will an ATO debt stop me getting a business loan?
Not a property-secured loan. ATO debt is considered and overdue lodgements don't stop it. Clearing tax debt is one of the most common reasons these loans are written.
Does it cost anything to apply?
No. There's no cost to apply or check your eligibility. All costs are set out in writing in your loan offer before you sign anything.
Will checking my eligibility affect my credit score?
No. Our 60-second eligibility check doesn't make a credit enquiry. A credit check is only done later, with your consent, if you decide to proceed.
