Before It Gets to a DPN: The Conversation You’re Currently Missing
Table of Contents
Tax Debt Corner column from CAFBA’s Commercial Insider
Somewhere in your book right now, a client is carrying tax debt they haven’t told you about. Maybe they don’t think it’s your business. Maybe they’re embarrassed. Maybe they don’t realise how fast it moves once it starts moving. Either way, the clock is already running, and you don’t know it yet.
Tax debt has a lifecycle, and the broker who shows up early secures a better, more structured deal than the broker who shows up late.
Tax debt negotiation should be a standing part of every broker’s playbook, not a one-off referral. It’s what opens the door to financing conversations that are actually worth having. The way you build that in starts with knowing where a client sits in the lifecycle, because that’s what tells you when to act.
A lot of people don’t realise how much of a tax debt is actually interest and penalties, not the original amount owed. That’s often a substantial chunk of the total, and it’s where remission, getting some of that interest and penalties waived, comes in.
Where Your Client Sits Right Now
A client mentions, almost in passing, that the ATO’s been chasing them. You don’t need the full story, just four quick questions:
- Is there existing ATO debt? No, nothing more to do here. Yes, next question.
- Are they already in a payment plan? No, that’s a straight refer now. Yes, next question.
- Is the plan actually sustainable? Yes, they’re in good shape, just keep watching. No, it needs renegotiating.
- Any DPNs, garnishee notices, or credit listings? Yes, that’s urgent, get us in immediately. No, keep monitoring.
Four questions, a minute on the phone, and you know exactly where the client sits and what to do next.
Who Does What, and When
The Tax Debt Lifecycle
The earlier the conversation, the more options remain.
EARLY
Cash flow, funding, refinance, restructure, asset equity.
MID
Payment plan, negotiation, remission once holding.
LATE
DPN, garnishee notices, credit listings, ATO recovery action.
Fewer options
Early on, it’s a cash flow conversation. That’s squarely broker territory, refinancing, restructuring finance, or unlocking asset equity to deal with the ATO on strong terms. This protects your relationship, keeps the client from seeking disjointed third party funding, and secures the primary loan volume.
Mid lifecycle, it’s a negotiation conversation. Our starting point is almost always a sustainable payment plan built around the business’s actual cash cycle, often stretching out to three years so the client can keep trading. Remission only comes into the picture once the client is protected and the plan is holding, not before.
This is where specialists come in, and it’s worth being explicit about who does what. The broker arranges finance for the full debt, interest included, so the client is trading on solid ground straight away. We negotiate with the ATO in parallel, building the payment plan and pursuing remission once it’s holding. Neither side waits on the other.
Here’s how that plays out across the scenarios we see most, across both existing and new clients for brokers:
| Scenario | Funding status | Broker’s role | Our role (Tax Assure) | Broker outcome | Client outcome |
|---|---|---|---|---|---|
| 1. Fund now, we work in parallel | Funding proceeding | Fund the full debt now | Put in place a payment plan to protect the deal, then pursue remission once paid | Deal proceeds without ATO interference, client/broker relationship strengthened or developed | Protected from ATO recovery action, ATO debt paid and interest and penalties refunded |
| 2. Deal not ready for lenders | Client wants funding, can’t get it due to ATO debt | Work with us to make client funding-ready | Put in place a payment plan to protect the deal and meet funder requirements, then pursue remission | Client becomes fundable and the deal can proceed, client/broker relationship strengthened or developed | Protected from ATO recovery action, ATO debt paid through funding and interest and penalties refunded |
| 3. No funding required now, might in future | Not required now | Pure referral, no lending involved at this time, relationship building | Put in place a payment plan to protect the client and any future deal, and meet funder requirements, then pursue remission | Client becomes fundable and any future deal can proceed, client/broker relationship strengthened or developed | Protected from ATO recovery action, ATO interest and penalties refunded |
| 4. No funding option available | No funding angle at all | Pure referral, no lending involved, relationship building | Put in place a payment plan to protect the client, then pursue remission | Broker reputation enhanced, good word-of-mouth by providing direct access to specialist ATO debt help | Protected from ATO recovery action, ATO interest and penalties refunded |
The through-line: whether or not funding is on the table right now, the job is the same, protect the client, protect the relationship. With new clients, that’s also the differentiator: they’re talking to lots of brokers, but you’re the one who got them the ATO solution.
What Happens If You Wait
Wait longer, and formal notices start landing. Roughly 84,000 Director Penalty Notices went out in the ATO’s most recent full year, a sharp 136% jump on the year before, and that number keeps climbing. Even once it’s a crisis, you can still be at the table, restructuring and funding a way through. But the easy, best paid version of this conversation is long gone by then.
The Move to Make
The move, the moment tax debt comes up, even in passing:
- Don’t sit on it. Flag it on the same call. Every week you wait is leverage gone, theirs and yours.
- Run the four questions above. It takes a minute and tells you exactly where things stand.
- Get the right specialist in immediately, before it escalates. We handle the ATO negotiation in parallel with your finance structure, so neither side stalls.
- Stay in it. Bringing in a specialist isn’t handing off the client. It’s how you keep them, and how the next financing opportunity finds you.
Brokers who build this into their standard client touchpoints aren’t just closing more deals, they’re the ones the client remembers when the next opportunity comes up.
If you’ve already been to a Breaking Bad session, you’ve seen this lifecycle mapped end to end, including what Cathro & Partners can still do once a business is past negotiation. If you haven’t, don’t wait. Sydney, Parramatta, Melbourne, Geelong, and Adelaide are the last sessions running this season, and seats are limited.
Your next client conversation about tax debt is coming, whether you’re ready for it or not.
Tax Debt Corner is Tax Assure’s bimonthly series in partnership with CAFBA.
Questions about a specific scenario? Email [email protected] and we’ll cover it in an upcoming edition.
This article is general information only and doesn’t take into account any individual’s specific circumstances. Every client’s situation is different. If you’ve got a client in mind and want to talk through the options, or want to know more about how we work with brokers, visit taxassure.com.au/for-brokers. We also offer a free initial tax debt consultation for your clients, get in touch and we’ll take it from there.
