Quick answer
Australian businesses get caught by tax-time cash crunches when BAS, PAYG instalments, PAYG withholding and super payments land while cash is tied up in stock, debtors or growth. Payday super from 1 July 2026 adds super to every pay run, and ATO interest incurred from 1 July 2025 is no longer deductible. Setting aside tax money weekly and forecasting ahead prevents most crunches; a short-term loan can bridge the rest.
Key points
- GST and PAYG withholding are other people's money held in trust
- Payday super from 1 July 2026 puts super into every pay run
- ATO interest charges incurred from 1 July 2025 aren't deductible
- Lodge on time even if you can't pay in full
Why do tax bills catch good businesses short?
Because the money that pays them arrives long before the bill does, and in the meantime it looks like ordinary cash. Every sale includes GST collected for the ATO. Every pay run includes PAYG withheld from staff wages. Until the BAS is due, that money sits in your account alongside everything else, and it’s easy to spend on stock, wages or growth.
Then the bill lands in a quiet month, or straight after a big quarter, and the cash isn’t there. It happens to well-run, profitable businesses all the time, particularly when they’re growing.
Which obligations cause the crunch?
| Obligation | What it is | Why it squeezes |
|---|---|---|
| GST | Tax collected on sales | Grows as sales grow |
| PAYG withholding | Tax withheld from wages | Held for staff, paid to ATO |
| PAYG instalments | Prepaid income tax | Based on past income, not today’s |
| Super | Employer contributions | Payday super from 1 July 2026 |
| Income tax | On profit after year end | A big annual lump |
| Fringe benefits tax | On benefits to staff | Annual, if relevant |
Check exact due dates on the ATO website or with your BAS agent, because they depend on how you report and whether you lodge through an agent.
What has changed recently?
Two changes make tax-time crunches more expensive:
ATO interest is no longer deductible. General interest charge and shortfall interest charge incurred on or after 1 July 2025 can’t be claimed as a tax deduction. Carrying an ATO debt now costs more in real terms than it used to.
Payday super. From 1 July 2026, employers must pay super at the same time as wages. Many businesses used the old quarterly cycle as an informal buffer. That buffer is gone, so every pay run is now bigger.
What happens if tax goes unpaid?
The unpaid amount becomes an ATO debt that accrues interest daily. If it grows or isn’t dealt with, the ATO can take firmer action, including garnishee notices, director penalty notices that can make directors personally liable for unpaid PAYG withholding, GST and super, and reporting large overdue business tax debts to credit reporting bureaus. Our page on paying ATO debt explains the fastest ways out.
A simple plan to see every bill coming
1. Open a tax account. A separate business savings account just for tax.
2. Transfer weekly. Each week, move across the GST collected, the PAYG withheld and a percentage of profit for income tax. Your accountant can suggest a percentage.
3. Build a tax calendar. List every due date for the next twelve months: BAS, PAYG instalments, income tax, FBT if relevant, and now super on every payday.
4. Forecast four weeks ahead. Each week, check whether the tax account covers what’s due in the next month.
5. Lodge on time, always. Even if you can’t pay in full, lodging avoids failure-to-lodge penalties and gives you a clear number.
When does a loan make sense for tax?
When there’s a genuine timing gap, a known way to repay and the cost of the loan is lower than the cost of letting the debt build. For example:
- A big quarter means a big BAS, but customers pay over the next six weeks
- A one-off event, such as a bad debt, drained cash just before BAS
- An old ATO debt is attracting non-deductible interest and enforcement risk
Illustrative example: an air-conditioning installer in Brisbane has a record summer quarter. The BAS is $110,000, but $160,000 of invoices are still outstanding on 30-day terms. A short-term cash-flow loan of $60,000 pays the BAS on time, alongside $50,000 from the tax account, and is repaid as invoices are paid. See BAS and GST bills for more.
When is a loan the wrong answer?
If the business is consistently unable to cover its tax, borrowing just moves the problem. Look at pricing, costs and payment terms with your accountant. A loan can buy time to fix the underlying issue, but it shouldn’t become a quarterly habit.
What about EOFY?
The end of the financial year adds year-end purchases, stock counts, insurance renewals and the June quarter BAS to the mix. Our EOFY cash crunch page covers it in detail.
Tax-time checklist
- Tax account opened and funded weekly
- Twelve-month tax calendar in your diary
- Payroll software set up for payday super
- Lodgements up to date
- Accountant briefed on any expected shortfall
- A line of credit or funding plan ready before the crunch
A sample annual tax calendar
Every business’s dates differ, so confirm yours with the ATO or your BAS agent. A typical quarterly GST reporter with employees might map the year like this:
| Period | What to plan for |
|---|---|
| Every payday | Wages, PAYG withholding and super (payday super from 1 July 2026) |
| After each quarter | Quarterly BAS: GST, PAYG withholding and PAYG instalments |
| May to June | Year-end planning, purchases and stocktake |
| July to August | June quarter BAS, quieter trade in many industries |
| Later in the year | Income tax return and any balance owing, depending on your lodgement program |
| If relevant | Fringe benefits tax return and payment |
Put these in your diary with reminders a month ahead, and check the tax account against each one.
How lenders view tax debt
Lenders see tax debt every day, and it’s considered case by case. What concerns them most isn’t the existence of a debt but signs that it’s out of control: lodgements years behind, several broken payment plans, or debts across multiple entities that nobody has mentioned. Lodging on time, keeping the ATO informed and disclosing everything upfront makes a big difference to how quickly a tax-related loan can move.
Talk to your accountant early
Your accountant can estimate upcoming bills, suggest a weekly set-aside percentage and help you compare a payment plan with a loan. Bring them in before the bill arrives, not after.
Three habits that prevent most tax crunches
Lodge early, not just on time. Lodging your BAS a week or two before the due date tells you the real number while there’s still time to plan for it.
Review the tax account monthly. Compare its balance with the next two bills. If it’s short, fix the weekly transfer amount straight away rather than hoping a good month catches it up.
Flag big quarters. When a quarter is unusually strong, the BAS will be too. Mark it in your diary the moment you notice.
If the crunch is already here
Talk to us early, before the due date if you can. A short enquiry takes about a minute. There’s no credit check when you first enquire, so it won’t affect your file, and your details aren’t sprayed across a crowd of lenders. A real person reads your enquiry, looks at the tax bill and your cash flow, and calls with the quickest sensible way through.
Please put the real amount owed and any property you own on the form, so we can match you properly the first time. See if you qualify.
Frequently asked questions
What should I do if I can't pay my BAS?
Lodge on time anyway, then deal with payment. Options include an ATO payment plan or a short-term business loan. Ask your accountant to compare them.
What is payday super?
From 1 July 2026, employers must pay super contributions at the same time as wages rather than quarterly.
Is ATO interest still tax deductible?
No, for general interest charge and shortfall interest charge incurred on or after 1 July 2025.
What's a director penalty notice?
It's a notice the ATO can issue to company directors for unpaid PAYG withholding, GST or super, which can make directors personally liable.
How much should I set aside for tax?
At a minimum, the GST you collect and the PAYG you withhold from wages, plus an estimate for income tax and PAYG instalments. Your accountant can help set a percentage.
