The ATO audit is over and the bill has landed: how to pay an amended assessment

An ATO audit usually ends with a notice of amended assessment: extra tax, shortfall interest charge, and possibly a penalty. The ATO gives you 21 days from the notice to pay the extra tax and shortfall interest, and general interest charge starts compounding after that. If you can’t pay from cash flow, a payment plan or a business loan are the two realistic ways through.

This guide is for the owner holding that notice right now. It explains what’s actually in the bill, why the clock matters more than it used to, and how lenders look at a debt that came out of an audit rather than a missed BAS.

What’s actually in an amended assessment bill?

Audits and reviews end in different ways, but the bill that follows tends to have the same three parts.

1. The extra tax. This is the shortfall: the difference between what you originally reported and what the ATO now says was owed. For a company or trust it might relate to income tax; for many small businesses an audit also touches GST or PAYG withholding.

2. Shortfall interest charge (SIC). The ATO explains that SIC runs from the date the tax would originally have been due until the date of the notice of amended assessment, compounding daily. It exists because you usually didn’t know about the shortfall until the ATO told you. If the audit reached back several years, SIC alone can be a large line.

3. A shortfall penalty. Not every audit produces one. Where the ATO decides a statement was false or misleading, the base penalty depends on behaviour:

Behaviour the ATO finds	Base penalty (before adjustments)
Failure to take reasonable care	A quarter of the shortfall
Recklessness	Half the shortfall
Intentional disregard of a clear obligation	Three-quarters of the shortfall

The base can be reduced for voluntary disclosure, or increased if the ATO finds you tried to hide the shortfall or had the same type of penalty before. There’s also a safe harbour where a registered tax or BAS agent made the error after you gave them everything they needed.

Add the three together and you have the real number. Owners are often braced for the tax and surprised by the rest.

How long do you have to pay?

The ATO’s guidance is direct: the extra tax and SIC are due 21 days after the notice of amended assessment is issued. If they’re still unpaid after that, general interest charge (GIC) applies automatically to the unpaid tax and SIC. Penalty notices carry their own due date.

That 21-day window matters for two reasons.

First, interest stops being “shortfall” interest and becomes GIC, compounding daily on a bigger base that now includes the SIC.

Second, the tax treatment changed. The ATO confirms that GIC and SIC incurred on or after 1 July 2025 are not deductible, even if the debt relates to an earlier income year. Before that, a business could at least claim the interest. Now every day an audit bill sits unpaid costs the full amount.

Payment plan or business loan: which suits an audit debt?

Both are legitimate. The ATO lets businesses that owe $200,000 or less set up a payment plan through online services or the self-help phone line; above that, you need to call. A plan stops escalation as long as you keep to it.

But an audit debt has a few features that push many owners towards clearing it outright:

• It’s often big and lumpy. A plan sized to an audit bill can stretch over a long period, and interest keeps running throughout.
• It sits on top of current obligations. You still have this quarter’s BAS, PAYG and super to pay. Two streams of ATO payments at once is where many plans fall over.
• You want a clean line under it. After months of questions and document requests, a lot of owners simply want the matter closed and their ATO account back to nil.

A business loan replaces the ATO with a lender on terms you’ve agreed. Our page on ATO tax debt loans explains the general mechanics; the rest of this guide covers what’s different when the debt came from an audit.

	ATO payment plan	Business loan
Speed to set up	Fast for smaller debts	Depends on lender and security
Interest	GIC keeps running, not deductible	Lender’s pricing; business-purpose interest is generally deductible (ask your accountant)
Ongoing ATO contact	Continues until paid	Ends once the ATO is paid
Risk if you miss a payment	Plan can default, escalation resumes	Lender’s default terms apply

Not sure which side of the table suits you? A quick, no-obligation chat about your audit debt starts with a 60-second form.

How do lenders look at a debt that came from an audit?

A lender’s first question is simple: is this a business that had a one-off problem, or a business that can’t keep up? An audit debt can look like either, so the way you present it matters.

Expect a lender to ask:

• What did the audit find? Wrongly claimed GST credits, a contractor who should have been treated as an employee, income booked in the wrong year, a trust distribution issue. The nature of the finding tells them whether it’s likely to recur.
• Has the cause been fixed? New bookkeeper, changed processes, a different software setup. A sentence or two is enough.
• Are lodgements now current? Lenders want to see that this quarter’s BAS and the latest returns are in.
• How is the business trading today? Bank statements carry more weight than an old return that the audit has now rewritten.
• Is there property? Property security widens the field of lenders and the size of debt that can be cleared. Property-secured business loans run from $20k to $5m through first mortgages, second mortgages and caveats. Unsecured options for trading businesses are typically $5k to $500k, sized on turnover and bank statements.

If the audit touched how your industry is classified or benchmarked, our guide to ATO benchmarks and business loans explains how lenders read those comparisons.

What about the penalty: should you fund that too?

Usually, yes, if it’s due. A penalty left unpaid also attracts GIC once its due date passes. That said, it’s worth a conversation with your tax adviser first. Penalties can sometimes be remitted in full or in part, and SIC can be remitted where there are extenuating circumstances, such as the ATO contributing to the error. If a remission request is realistic, some owners fund the tax and SIC immediately and hold the penalty decision until the ATO responds.

What you shouldn’t do is wait for a perfect answer before acting on the rest. The 21 days run regardless.

What does this look like in practice?

Illustrative example only. A family-owned landscaping company has a GST and income tax review covering two years. The ATO finds that some private vehicle costs were claimed as business expenses. The amended assessments show around $140k of extra tax and shortfall interest, plus a smaller penalty for failing to take reasonable care.

The company is trading well and current on its BAS, but its cash is committed to a big spring contract. The directors own their home with solid equity. Rather than run a long ATO plan alongside their normal quarterly obligations, they use a second mortgage over the home to clear the full ATO balance within the 21 days. Their accountant lodges a remission request for part of the penalty at the same time. The loan has a fixed term, and the directors plan to reduce it from contract income over the following year.

The point isn’t the property. It’s that the debt was cleared before GIC started, and the business carried one predictable repayment instead of two competing ones. Our secured or unsecured tool helps you see which way your own situation leans.

Mistakes owners make after an audit:

• Treating the notice as the start of a negotiation. The debt is payable while you consider your options.
• Paying the tax but forgetting the SIC. Both are due within 21 days.
• Letting current BAS slip while focusing on the audit bill. That creates a second debt and makes lenders nervous.
• Hiding the audit from a lender. It will show in your ATO account and your statements. Explaining it up front is far better.
• Borrowing without a repayment plan. A loan should fit the business’s real cash flow, not just make the letter go away.

Audit finished? Ready to get the bill off your desk?

An audit is exhausting. By the time the amended assessment arrives, most owners just want it finished, and the good news is that a sound business with a one-off tax bill is exactly the kind of file we’re comfortable looking at.

Our enquiry form takes about a minute, and there’s no credit check when you first enquire. We don’t fire your details out to a pile of lenders, so your phone won’t light up with strangers. Instead, a real person reads what you’ve told us about the audit, the amount and your security, and calls you to talk through the sensible options. Please fill it in accurately, including the full amount on the notice and any penalty, so we can match the right option the first time.

Talk to us about clearing your ATO audit bill →