Refinance to pay out your ATO debt
If you own your home and owe the ATO, the equity you've built may be able to clear that debt in one move.
Only some lenders allow it, and Anita knows which ones on her panel do.
Reviewed by Anita Callaghan, Director and Principal Broker of Anita Finance, Credit Representative 557021.
Last updated .
What an ATO debt costs you while it sits there
The ATO charges general interest on unpaid tax, worked out daily on a compounding basis. (ATO)
The ATO reviews that interest rate every quarter. (ATO)
ATO interest charges incurred on or after 1 July 2025 can no longer be claimed as an income tax deduction. (ATO)
Paying the debt out through a refinance brings it into your home loan, as one loan with one repayment.
It can also take the day-to-day pressure of a payment plan off your plate.
Home owners with a tax bill to clear
- Home owners with equity in their property and a tax debt they'd like to clear.
- Sole traders and business owners whose tax bill has built up after a demanding year.
- Self-employed borrowers, who may also be looking at low doc and alt doc lending.
- Anyone looking beyond their own bank, because policy on tax debt varies between lenders.
Why the lender matters as much as the rate
Each lender sets its own policy on paying out tax debt through a refinance.
The questions usually cover how the debt built up, whether your tax lodgements are up to date, and whether you have a payment arrangement with the ATO.
Lenders also look at the equity in your home and whether the new loan suits your budget.
Anita works through each of these with you first, so your application goes to a lender whose policy may suit your circumstances.
Anita is a mortgage broker, so she looks after the lending side, and your accountant or registered tax agent is the right person for advice on your tax position.
She's happy to work alongside your accountant so the 2 sides line up.
From tax debt to one home loan
The full picture
Your tax position, your home loan and your equity, looked at together in a first conversation.
Your accountant in the loop
Anita suggests you confirm the tax side with your accountant, and works alongside them.
A lender whose policy may suit you
Your application goes to a lender that allows tax debt to be paid out through a refinance.
Paid out at settlement
At settlement, the new loan pays out your ATO debt along with your existing home loan.
Questions about refinancing to pay ATO debt
Can I use my home loan to pay off tax debt?
Yes, some lenders let you refinance your home loan and use your equity to pay out an ATO debt.
Policy varies a lot between lenders, which is why the lender you choose matters as much as the rate.
Is ATO interest tax deductible?
ATO interest charges incurred on or after 1 July 2025 can no longer be claimed as an income tax deduction, according to the ATO.
Your accountant can confirm how that applies to your own situation.
Can I refinance while I'm on an ATO payment plan?
Some lenders will consider an application from a borrower who's on an ATO payment plan.
Anita can tell you which lenders on her panel are likely to suit your situation before anything is submitted.
Is this only for self-employed people?
It suits anyone who owns their home and owes the ATO.
That includes sole traders, business owners and employees with a tax bill from an investment or a side business.
Should I refinance or keep paying the ATO?
It depends on the cost of refinancing, the interest the ATO is charging and your wider situation.
Anita shows you the lending side, so you and your accountant can compare the 2 options properly.
Other ways Anita can help
Self-employed, low doc and alt doc loans
Home loans for business owners and sole traders whose income comes in its own shape.
Read moreRefinance your home loan
Your current loan compared against today's market, so you can see whether moving is worth it for you.
Read moreDebt consolidation refinance
Credit cards, car loans and personal loans brought into your home loan, with the full cost laid out.
Read moreAbout Anita
Bank trained, now broking for families and business owners across Sydney and Australia.
Meet AnitaClear the debt and move forward.
Tell Anita roughly what you owe the ATO and what your home is worth, and she'll come back to you with the lenders that could help.
The first conversation usually takes about 20 minutes, and it gives you a clearer picture of your options.
Monday to Friday, and after hours when needed.