Your business tax bill is bigger than expected: sorting it before the due date

“How much?” — the moment the return comes back

You had a good year. The business grew, the work was steady, and the accountant finalised the return. Then the number arrived, and it was far larger than anything you’d set aside.

It’s one of the most common surprises in small business, and one of the most fixable — provided you move before the due date rather than after it. This guide walks through why it happens, the options for paying it, and how to stop it happening again.

Why do tax bills surprise business owners?

Usually one or more of these:

Cause	What happened
A better year than last year	PAYG instalments were based on last year’s lower profit
Instalments varied down	A variation made in a tough quarter wasn’t reversed when trade recovered
Instalments not paid	Quarterly instalments were missed or deferred, so the full amount lands at once
One-off income	An asset sale, an insurance payout or a large contract settled late in the year
Smaller deductions	Planned purchases didn’t happen, or were made after 30 June
Timing	Income was recognised this year but the cash is still coming

Knowing which applies helps twice: it tells you whether the bill is correct (ask your accountant to walk you through it), and it tells you what to change for next year.

What should you do first?

Lodge on time. Lodging and paying are separate obligations. The ATO recommends contacting it before the due date if you can’t pay, and lodging on time keeps options such as a payment plan open.

Get the exact number and date. Your notice of assessment or ATO online services shows the amount and due date. If your accountant manages your lodgments, ask them to confirm both.

Check what else is due in the same window. Tax bills rarely arrive alone. Quarterly PAYG instalments are due 28 days after each quarter — 28 October, 28 February, 28 April and 28 July — and BAS amounts fall on the same days. A large income tax bill plus a BAS in the same month is a very different problem from one bill in isolation.

What are your options for paying it?

1. Pay from cash. If the business has the reserves without creating a new gap in payroll or suppliers, this is the simplest option. Check your cash forecast first — paying the ATO and then missing a pay run solves nothing.

2. An ATO payment plan. The ATO says that if you owe $200,000 or less, you may be able to set up a payment plan through its online services. It’s quick to arrange, and instalments can be matched to your cash flow. The trade-offs: general interest charge keeps accruing on the plan balance and compounds daily, ATO interest incurred on or after 1 July 2025 can no longer be claimed as a tax deduction, and new tax bills keep arriving on top of the plan. The ATO also describes interest-free 12-month arrangements for some small businesses with activity statement debts — though an income tax bill isn’t an activity statement debt, so check eligibility carefully.

3. Business finance to pay it in full. Funding the bill out means the ATO balance is cleared, the daily interest stops, and you have one known repayment to manage. It’s worth comparing when the bill is large, when a plan would run for a long time, or when an outstanding tax debt would get in the way of other plans. ATO debt is considered case by case.

4. A mix. Pay part from cash, fund part, or use a short plan for the remainder. There’s no rule that says it has to be one or the other.

How do you compare a payment plan with finance?

Put both options side by side over the same period:

• Total cost: GIC on a reducing balance over the plan’s term, versus the total cost of the finance for the same term. Every loan is priced on the individual situation, so you’ll need a real quote to compare.
• Cash flow: plan instalments plus the next BAS and PAYG instalments, versus a loan repayment plus those same bills.
• Risk: the ATO notes that if a plan instalment is missed, the plan may default and the full overdue balance can become immediately payable. See missed ATO payment plan instalment.
• Other plans: would a tax debt on file affect a refinance, a lease or a purchase you’re planning?

If finance looks like the better fit, start the 60-second enquiry with the bill amount and due date. For a deeper look at the trade-offs, see tax debt business finance.

Which kind of finance suits a tax bill?

• Smaller bill, trading business: unsecured cash-flow funding, typically $5,000 to $500,000, sized on turnover and bank statements. Same-day funding is possible for smaller amounts.
• Larger bill, or a tax bill plus older ATO debt: a property-secured loan from $20,000 to $5,000,000. $20k to $250k is possible same day and up to $5m within 24–48 hours.

The triage checker will suggest a pathway based on the amount, deadline and your security.

An illustrative example

Illustrative only. A digital agency grows revenue by 40% in a year. Its PAYG instalments were based on the previous year’s profit, so when the company return is finalised, there’s an income tax balance of $118,000 to pay. The same month, the July–September BAS of $46,000 falls due on 28 October.

A payment plan for the income tax would run at least 12 months with GIC compounding daily, overlapping with three more BAS quarters. The directors instead use unsecured funding sized on the agency’s turnover to clear the income tax, pay the BAS from cash, and ask their accountant to review the PAYG instalment rate for the current year so it reflects the new level of profit.

How do you stop a repeat next year?

• Check your instalments. If this year is tracking above last year, your instalments may be too low. Your accountant can advise whether a change is appropriate.
• Set tax aside monthly. Move a fixed percentage of income into a separate account. It’s the simplest habit that prevents surprises.
• Do a tax estimate in May. Before 30 June, not after, ask your accountant for a rough estimate of the year’s tax. There’s still time to plan.
• Put the dates in the calendar. Our business bill calendar lays out BAS, PAYG and income tax timing alongside payroll and suppliers.
• Keep an eye on EOFY. See our page on the EOFY cash crunch.

What should you ask your accountant?

A short meeting with your accountant after the return is finalised can answer most of the important questions:

• Is the bill correct? Walk through the main items so you understand where it came from.
• What caused the jump? Higher profit, one-off income, lower deductions or instalment settings.
• What should instalments be this year? So the same thing doesn’t happen again.
• What’s the best way to pay? Cash, plan, finance or a mix, given your cash flow.
• Are there other bills coming — BAS, super, payroll tax — that affect the timing?

Take your cash forecast to the meeting. It turns a conversation about tax into a practical plan.

Clear the bill and move on

A big tax bill usually means the business did well — it just wasn’t planned for. If you’d rather clear it than carry it, tell us the amount, the due date and what else is falling due. There’s no credit check at the enquiry stage, your details go to one team rather than being passed from lender to lender, and a real person works through the options with you and calls. Please fill in the form accurately, including any existing ATO balance, so the first option we put forward is the one that fits.

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