Can you get equipment finance while you're on an ATO payment plan?

Yes. Plenty of businesses finance equipment while paying off the ATO. What lenders want is evidence that the plan is current, that new tax is being paid on time, and that the business can afford the plan instalment and the new repayment together. A plan in arrears or default is a much harder conversation, so get the details together before you apply.

An ATO payment plan often comes at the same moment the business needs equipment. Work has picked up, the old machine is struggling and the tax caught up with growth. That combination makes sense to an experienced lender, as long as you show it clearly.

Why doesn’t a payment plan automatically mean no?

Because a plan in good standing tells a lender something useful: the business knows what it owes, has agreed a way to pay it, and is sticking to it.

The ATO’s own rules reflect that. It says it won’t report a business’s tax debt to credit reporting bureaus if the business is effectively engaging to manage it, and a payment plan counts as engagement when the business is complying with its terms (disclosure of business tax debts). Those reporting rules apply to businesses with at least $100,000 overdue by more than 90 days that aren’t engaging.

Equipment finance also has a built-in advantage: the asset is the security. A lender funding a mainstream machine with a strong resale market has something tangible to rely on, which can make it more comfortable looking past a tax debt that’s under control. The equipment finance page explains how lenders weigh the asset against the rest of the application.

What will an asset lender check about your plan?

Most lenders want to see four things.

What they check	What a good answer looks like
Plan status	Current, with every instalment paid on time
How long it’s been running	Several months of on-time instalments on your bank statements
New obligations	Recent BAS lodged and paid on time, so the debt isn’t growing
Affordability	Plan instalment plus the new repayment fit comfortably inside your cash flow

The ATO’s payment plans page says businesses on a plan need to keep lodging on time and pay new debts in full, or set up a separate plan for them. Lenders look for exactly the same thing. A plan that’s being paid while fresh BAS debts pile up behind it is a red flag.

What makes a payment plan look risky to a lender?

The ATO’s guide to managing your payment plan explains that missing an instalment can move a plan into arrears, and that if a plan defaults, the whole overdue balance becomes immediately payable and the ATO may take firmer action. A lender reads those situations the same way: the business could be facing a large, sudden demand.

Other warning signs include:

• A brand-new plan with only one or two instalments paid.
• Several plans, or a plan that’s been renegotiated more than once.
• A plan that’s very large relative to turnover.
• Unlodged returns or activity statements.
• Other arrears, such as super or supplier debts.

None of these is automatically fatal, but each one means the lender will want more security, a deposit or a clearer explanation.

How do you present the plan so the answer comes faster?

Lead with it. Lenders are far more comfortable with a debt you’ve told them about than one they’ve found.

Put together:

• an ATO statement or portal screenshot showing the balance and plan status;
• the plan’s instalment amount and frequency;
• bank statements showing the instalments going out on time;
• evidence your latest BAS was lodged and paid;
• a short note explaining how the debt arose and how the new equipment helps.

That last point matters. “We grew quickly, the BAS caught us out, we’re on a plan, and this second truck lets us take on the contract that’s already been offered” is a story an asset lender understands. If you’d like a real person to look at your situation before you go any further, start a short enquiry. There’s no credit check at that stage.

Should you clear the ATO debt first?

Sometimes. It’s worth considering if:

• the plan is large and the instalments are squeezing cash flow;
• the plan has been in arrears recently;
• the GIC is adding up faster than you’d like. The ATO notes that tax debts on a payment plan keep accruing general interest charge, which compounds daily.

Options to clear it include a loan secured by residential or commercial property (property-secured business loans run from $20k to $5m) or, for smaller debts, an unsecured or cash-flow facility sized on turnover, typically $5k to $500k. Bad credit and ATO debt are considered case by case. The ATO tax debt loans page explains how those applications are assessed.

If you already own equipment outright, a sale and leaseback can release cash from it. Our guide on using a sale and leaseback to clear an ATO debt covers how that works.

Does the type of equipment change the lender’s view?

Quite a lot. When there’s a tax debt in the background, the asset carries more of the weight, so what you’re buying matters.

Mainstream, mobile assets help most. Utes, vans, trucks, trailers and common earthmoving gear have deep second-hand markets. A lender knows it could sell them quickly if it had to, which makes it more relaxed about the rest of the file.

Specialised or fixed equipment is harder. A bespoke production line or a fit-out item has fewer buyers and is often bolted to someone else’s premises. With a tax debt in the picture, expect a lender to ask for a deposit, a shorter term or extra security. Our guide to specialised equipment and resale value explains why.

New or near-new helps. Older assets near the end of their working life give a lender less to rely on, and some lenders cap the age of an asset at the end of the term.

A deposit closes the gap. Even a modest contribution shows the business has some cash to spare beyond the plan instalments, and it means the lender is funding less than the asset is worth.

Price it properly. A supplier quote that matches the market, with the make, model, serial number and condition spelled out, removes one more question from the lender’s list.

Putting those together, a business on a current plan buying a mainstream asset with a small deposit is a very different proposition from one in arrears buying something only three companies in Australia would want. Both can sometimes be funded; the first is simply far more straightforward.

An illustrative example

Illustrative only. A small plumbing business grew quickly last financial year and fell behind on its BAS. It set up an ATO payment plan seven months ago and hasn’t missed an instalment. It has also lodged and paid the last two quarterly activity statements on time.

Now it needs a second fitted-out van for a new apprentice and a maintenance contract with a body corporate. The owner sends the lender the van quote, the signed maintenance agreement, six months of bank statements showing the plan instalments, the ATO portal screenshot and a two-paragraph explanation.

The lender sees a current plan, new tax being paid, a mainstream vehicle as security and a contract that adds revenue. It approves the van under a chattel mortgage, with a modest deposit. The owner keeps paying the plan and expects to finish it early once the new contract is running.

On a plan and need the gear anyway? Let’s talk

We help business owners with ATO debt regularly, and a payment plan you’re keeping up with is something we can work with. The key is getting the full picture across early.

Our enquiry takes about 60 seconds and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders, so you won’t be fielding calls from strangers. A real person reads what you send, including the ATO side, and calls you to talk through what’s realistic. Please answer the form accurately, including the plan balance and instalment, so we can find the right option the first time.

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