ATO and payroll tax debt: finance options for health and care businesses

Tax debt rarely comes from carelessness. In health and care businesses it usually comes from growth: a clinic hires three new clinicians, an NDIS provider doubles its participants, a childcare group opens another centre. Wages and GST go up immediately. The cash to pay them arrives later. Then a BAS falls due, or a payroll tax assessment arrives for arrangements the owner thought were settled, and the business is behind. If that sounds familiar, you’re far from alone, and there are ways forward.

What kinds of tax debt do care businesses carry?

Debt	Common cause
BAS (GST)	GST collected on taxable sales used for working capital, then due in one hit
PAYG withholding	Staff numbers grew faster than cash reserves
Income tax	A strong year followed by a weaker one when the bill arrived
Superannuation	Cash-flow pressure; Payday Super now tightens timing
State payroll tax	Crossing the threshold through growth, or assessments on contractor arrangements

Many health services are GST-free, so the GST exposure for clinics is often smaller than in retail. Pharmacies, aged care and other providers with a mix of taxable sales can still build up BAS debt.

Why has payroll tax been a problem for medical centres?

Over recent years, state revenue offices have assessed payroll tax on payments to some contractor doctors working in medical centres, treating those payments as wages under the contractor provisions. The response has differed by state:

• NSW. Revenue NSW’s CPN 036v2 describes an exemption for unpaid payroll tax on relevant GP wages paid before 4 September 2024, and a rebate for GP contractor wages from 4 September 2024 where at least 80% of GP services are bulk billed in metropolitan Sydney, or 70% in regional areas.
• Victoria. The Victorian Government announced relief for past periods and, from 1 July 2025, a payroll tax exemption on payments for bulk-billed GP consultations. The State Revenue Office publishes guidance for the medical industry.
• Other states and territories have taken their own approaches. Check with your state revenue office and a tax adviser.

Our payroll tax guide for medical centres explains how the rules work and what to review.

When does refinancing tax debt make sense?

Refinancing isn’t the answer for every tax debt. It tends to suit a business that:

• is trading well now, but carries debt from a past rough patch or a one-off assessment
• has property equity it’s willing to use as security
• wants one predictable repayment rather than an arrangement that could change
• needs to stop enforcement action that threatens the business

It suits less well when the business is still losing money each month. Borrowing to clear a debt that will rebuild just moves the problem. In that case, fixing cash flow comes first. The claims gap calculator can show whether slow payments are part of the cause.

What will a lender look at?

1. How the debt arose. Growth, a one-off assessment and an ongoing shortfall are very different stories.
2. Current trading. Recent bank statements showing the business covers its costs now.
3. Your arrangements with the ATO or revenue office. Whether there’s a payment plan and whether it’s being kept.
4. Security. Property-secured loans from $20,000 to $5,000,000, as first or second mortgages or caveats over residential or commercial property, are the usual route.
5. Lodgements. Whether BAS and returns are up to date. Unlodged returns need to be fixed first.

ATO debt and past credit issues are considered case by case. Being upfront is the fastest way to a real answer. A 60-second enquiry is a good place to start.

Talk to the ATO early

The ATO says there are support options if you can’t pay on time. The earlier you engage, the more options you usually have. Keep lodging on time even if you can’t pay in full, because unlodged returns make everything harder, including finance.

An illustrative example

Illustrative only. A medical centre received a payroll tax assessment covering several past years for payments to contractor GPs, before its state introduced relief. The practice now trades well and has restructured its arrangements, but the assessment is larger than its cash reserves. The owners have equity in a commercial property. A property-secured loan could clear the assessment in one payment, replacing it with a repayment schedule the centre’s current income can support.

Keeping it from happening again

Clearing a debt is only half the job. The other half is stopping it rebuilding. Practical steps include moving GST and PAYG withholding into a separate account each time income arrives, reconciling payroll tax monthly rather than at the annual reconciliation, and setting up super to be paid with each pay run now that Payday Super applies. A 13-week cash forecast with every tax date on it turns surprises into scheduled payments. If slow payments from government programs are part of the cause, our payment cycles pages explain each system’s timing.

Talk to someone who won’t judge

Tax debt can feel isolating, especially when you’ve spent your career looking after others. We see it often in care businesses and treat it as a problem to solve, not a verdict. The enquiry takes about a minute and involves no credit check. Your details stay with one team rather than being sent to every lender in town. A real person will read your situation and call you.

Please tell us accurately what’s owed, to whom, and what property is available. Full information helps us find the right option first time.

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