For Brokers: Why Compliance Is the Key to Keeping Deals Alive
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If you’re a broker writing commercial deals right now, you’re seeing tax debt. A lot of it.
With ATO debt hitting $105 billion — and $54 billion of that actively being chased, two-thirds from SMEs — it’s affecting deals across the board. From initial applications through to settlement, ATO debt creates friction at every stage of the financing process.
But most brokers only see half the picture. They see the problems tax debt creates. They don’t see the opportunities it presents.
What Most Brokers Miss
Here’s what most brokers don’t know: there’s an opportunity hiding inside every ATO debt problem.
The ATO cares more about compliance than collection. Their internal KPIs aren’t focused on recovering every dollar immediately — they’re about getting taxpayers into manageable payment plans and compliant again.
A formal payment plan shifts a business from “non-compliant” to “compliant.” That single change can reopen doors with lenders that seemed permanently shut.
In our experience working with hundreds of businesses, around 97% with ATO debt can negotiate workable payment plans — if they act early enough and act properly.
The size of the problem is the size of the opportunity
$54 billion in collectable debt has blown out from $26 billion prior to COVID — meaning many more businesses are affected. The average ATO debt we’re seeing has almost doubled, meaning many more businesses can’t clear their debt without external finance.
At Approval
Getting a payment plan in place isn’t just about avoiding problems. It’s about repositioning the deal. Lenders can work with compliant taxpayers. The deal moves forward.
At Settlement
Interest and penalties can often represent 30–50% or more of total ATO debt. The ATO has established frameworks for remitting these charges where businesses can demonstrate reasonable grounds.
Think about what this means practically: Your client needs to borrow $150k to clear ATO debt at settlement. But tactical remission could reduce that debt by $50k. Now you’re looking at a $100k requirement.
That difference determines whether the deal stacks up or falls over. Or if they borrow the full $150k, they now have $50k in unexpected working capital. That’s how you build clients for life.
For Your Back Book
Many businesses have been paying penalties and interest on ATO debt for years without realising those charges can often be remitted. Specialists can go back years to obtain refunds of charges already paid.
Some brokers working with tax debt specialists have helped clients obtain hundreds of thousands in refunds by identifying accrued and paid interest and penalty charges.
This creates a powerful reason to re-engage clients and referrers like accountants. It protects your existing clients and any trail while demonstrating genuine value. Even if the debt was paid out as part of previous funding, those charges can still be reviewed and potentially refunded.
But Here's the Catch
All of this only works if you act before the ATO does.
The ATO is wielding enforcement powers more aggressively than ever. They’re pushing hard to reduce the national debt mountain and send a clear message that tax isn’t a line of credit.
When they move to enforcement, deals die fast.
Director Penalty Notices (DPNs)
Create personal liability for directors, shifting debt from the company to the individual. This changes everything for lenders assessing risk and can force directors to explore insolvency options rather than completing the transaction.
Credit Reporting
Kills deals immediately. Many lenders won’t touch businesses with ATO debt on their credit file.
Frozen BAS Refunds
Lock up working capital businesses are counting on. When a client expects a GST refund to cover operating expenses, a freeze creates cash flow chaos.
Garnishee Notices
Can drain bank accounts without warning and damage customer and supplier relationships, stopping business operations entirely and destroying any chance of funding approval.
Winding Up Proceedings
Can end a business overnight, freezing all accounts and collapsing any finance in progress.
The Timing Trap
The stick is real, it’s powerful, and it comes fast. Once enforcement starts, your client’s negotiating position collapses. And so does your chance of settling the deal.
Don’t make the mistake of thinking that because financing is coming, everything’s okay. You need them in a payment plan now, not in six weeks when the deal settles. Once a formal plan is in place, enforcement stops. Even a short-term arrangement (e.g. two or three months) protects them while the funding settles.
You can't see what's coming
It’s impossible to know where the ATO is at with enforcement once a client is in a non-compliant position. You can’t see inside the ATO’s enforcement queue — you don’t know if a DPN is about to drop, if they’ve been flagged for credit reporting, or if a garnishee is being prepared.
The ATO doesn’t give advance warning on most enforcement actions. And once things escalate, the whole negotiation changes.
The debt doesn’t need to be paid off. It needs to be in a plan. That’s the only thing that protects your client, and that can be the difference between a deal that closes and one that blows up.
Why This Matters Now
The brokers doing well right now are the ones catching tax debt early, bringing in specialists, and turning problems into closed deals.
In Summary
- Tax debt doesn’t kill deals. Non-compliance does. Get clients into a payment plan — even a short-term one — and enforcement stops.
- There’s money on the table. Interest and penalties can be 30–50% of total debt. Tactical remission can reduce what clients need to borrow.
- You can’t wait. The ATO doesn’t give advance warning. If financing is six weeks away, the client needs to be in a plan now.
Got a Client With ATO Debt?
If you’re dealing with a client whose ATO debt is affecting their financing options, get in touch with the team. Every referral receives a free, no-obligation review with detailed recommendations and costs.
Phone: 1300 952 295 Email: [email protected]
If you’ve got questions or just want to connect — reach out to me on LinkedIn or send me an email. My door’s always open.
