Overview
The ATO has just hiked its penalty interest rate to 11.34%, the highest it’s been in over two decades. For brokers and small business owners, this change makes carrying tax debt significantly more expensive. At TrailBlazer Finance, we have seen firsthand how outstanding ATO debt can derail funding applications and cash flow. Here is what you need to know and how to stay ahead.
What’s Changed?
As of 1 July 2025, the ATO’s General Interest Charge (GIC) has risen to 11.34%, while the Shortfall Interest Charge (SIC) has climbed to 7.34%. These rates apply to overdue tax liabilities, and the increase reflects the broader rise in Australia’s official cash rate.
The numbers are alarming. Small businesses account for 65% of all collectable debt owed to the ATO, which amounts to $34 billion. Over the past four years, the total collectible debt, from businesses and individuals, has surged from $26.5 billion in June 2019 to $54 billion in late 2024 — It has more than doubled! This sharp rise highlights the escalating pressures on small businesses across the country.
How We Can Help
An 11.34% penalty rate is well above most commercial lending rates, meaning unpaid tax debt is now one of the most expensive forms of borrowing. For brokers seeking growth funding or working capital, unresolved ATO debt can:
- Reduce your creditworthiness
- Disqualify you from low-doc lending
- Delay or prevent access to fast funding products like Trail Xpress
What You Should Do Next
If you’re currently managing or anticipating ATO debt:
Get clear on your tax position — speak to your accountant.
Don’t delay repayments — the cost is rising monthly.
Consider refinancing high-cost debt using a tailored loan solution.
Check your eligibility for Trail Xpress funding here.
Need Help Navigating Tax Debt + Funding?
We are here to help. If you’re unsure how this affects your ability to borrow, make an enquiry and one of our specialists will guide you through your options.
Source:
Adapted from Broker Daily: “Owing the ATO Just Got Way More Expensive”, published June 3, 2025.
