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How to get a home loan with an ATO tax debt

While having an ATO debt is not ideal, this doesn’t disqualify you from borrowing money for a home loan.

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If you have a debt with the Australian Tax Office (ATO), there are several steps you can take to consolidate your tax debt in order to get the finance you need.

Can I get a home loan if I have a tax debt?

The size of your tax debt and your history of repaying the debt will be crucial factors that a lender will consider when reviewing your home loan application. One option worth considering is refinancing your tax debt and combining it with the new home loan you take out. While Australian banks are highly unlikely to allow you to refinance your debt to the ATO, there are non-bank lenders available who may be able to help.

They will take into account the reason for your tax debt and the steps you have taken to repay it when deciding whether or not to offer you a loan. Some lenders are more conservative than others, so this will affect their final decision.

How to get approved for a loan

Each lender has its own approach to risk that borrowers must satisfy in order to be approved for a loan. However, there are several steps you can take to improve your chances of getting approved for a loan:

  • Provide evidence of income. From pay slips and bank statements to business activity statements, you’ll need to supply proof of income to your lender so that your propensity to repay the loan can be evaluated.
  • Manage your debt. If you have a tax debt in your name, the lender will assess what steps you are taking to pay off the money you owe. So if you’ve set up a payment plan with the ATO and made regular instalments over a period of six months or more, the lender will view your loan application in a more favourable light.
  • Provide explanation for your tax debt. There are several reasons why you may have ended up with a tax debt: perhaps you made an error on your return, maybe you were late lodging your return, or you may have incurred a large capital gains tax bill. You’ll need to provide the lender with a reason for your tax debt, and this reason may affect its decision to offer you financing. For example, if an error by your accountant led to the bill, you’ll most likely be seen as a more reliable borrower than someone who forgot to complete their tax return on time.
  • Try to stay out of court. If you have a history of missing repayments or if you have failed to communicate effectively with the tax office, the ATO may launch legal action against you. This could lead to a court writ or judgment being included in your credit file. which will count against you in the eyes of lenders. Make sure you liaise with the ATO every step of the way to signal your intention to repay the debt as quickly as possible.

Tips for paying off tax debt

Keep the following tips in mind to ensure that you repay your tax debt to the ATO as quickly as possible:

  • Stay in touch with the ATO. It can be tempting to ignore repayment notices and correspondence related to your tax debt, but this will only lead to more financial pain. You or your accountant will need to keep in regular touch with the ATO and respond to any requests for information as quickly as possible.
  • Set up a payment plan. Set up a payment plan with the ATO to help you pay off your debt at an affordable rate. Do everything you reasonably can to make sure that you pay your regular instalments on time.
  • Listen to your accountant. You pay your tax accountant for advice, so listen to what they say. Experienced accountants will have been through the process several times before with other clients and can help you get your finances back on track.
  • Consider refinancing. While banks are reluctant to refinance tax debt, there are several other lenders who can help. Consider the refinancing options available to find one that will allow you to consolidate your debt into an affordable loan.

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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
2.64%
2.66%
$0
$0 p.a.
80%
Up to $4,000 refinance cashback.
A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get up $4,000 cashback for their first application (Other terms, conditions and exclusions apply).
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
2.49%
2.49%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I)
2.68%
2.69%
$0
$0 p.a.
80%
$2,000 to $3,000 refinance cashback.
Get a competitive variable interest rate with no application fee or ongoing fees. Refinance to an eligible Suncorp loan and get a cashback of $2,000 or $3,000, depending on your loan amount. Other conditions apply.
Athena Celebrate Home Loan - 60% LVR  Owner Occupier, P&I
2.39%
2.39%
$0
$0 p.a.
60%
A very low variable rate for home buyers with 40% deposits or equity. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
homeloans.com.au Low Rate Home Loan with Offset - LVR Under 60% (Owner Occupier, P&I)
2.44%
2.46%
$0
$0 p.a.
60%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)
2.59%
2.60%
$0
$0 p.a.
80%
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online.
Well Home Loans Balanced Variable - LVR 80% Special Offer (Owner occupier, P&I)
2.17%
2.20%
$250
$0 p.a.
80%
A very low interest rate for home buyers with 20% deposits saved. Add an offset account for a small fee. This special discount rate is available for new borrowers who apply and get approved by 30 November 2020. Not available for construction purposes.
Tic:Toc Live in 10% deposit Variable Rate - Principal & Interest
2.39%
2.40%
$0
$0 p.a.
90%
Get a very low interest rate and pay no application, settlement or valuation fees. Apply online for full approval in real time and add a 100% offset account for $10 a month.
IMB Budget Home Loan - LVR ≤80% (Owner Occupier, P&I, NSW and ACT borrowers only)
2.61%
2.67%
$449
$0 p.a.
80%
A competitive variable rate for borrowers with 20% deposits saved. Available for NSW and ACT borrowers only.
Yard Variable Home Loan - LVR 80% Special (Owner Occupier, P&I)
2.39%
2.42%
$0
$0 p.a.
80%
A very low variable rate loan for home buyers with an optional offset account ($10 monthly fee). 20% deposit required.
Tic:Toc Live in Loan Fixed Rate Home Loan - 2 Year (Owner Occupier, P&I)
2.09%
2.35%
$0
$0 p.a.
90%
Get a very low interest rate and pay no application, settlement or valuation fees. Apply online for full approval in real time and add a 100% offset account for $10 a month.
Bank of Melbourne Basic Home Loan - Special Offer (Owner Occupiers, P&I) LVR above 60% up to 80%
2.64%
2.66%
$0
$0 p.a.
80%
Up to $4,000 refinance cashback
A competitive variable rate loan from Bank of Melbourne. Refinancers borrowing $250,000 or more can get up $4,000 cashback for their first application (Other terms, conditions and exclusions apply).
AMP Bank Professional Package Variable Rate Home Loan - $100,000 and above, LVR ≤ 80% incl. LMI (Owner Occupier, P&I)
2.59%
3.00%
$0
$349 p.a.
80%
Get a sharp rate with no application or settlement fee, a redraw facility and 100% offset account. Other fees and charges apply.
Virgin Money Reward Me Fixed Rate Home Loan - 2 Year $300k+ Special offer (Owner Occupier, P&I)
2.29%
2.87%
$300
$10 monthly ($120 p.a.)
80%
$2,500 refinance cashback
Buy your home and lock in a low rate for the first two years. Get a $2,500 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 29 August and settle by 28 February 2021.
Yard Variable Home Loan - LVR 90% (Owner Occupier, P&I)
2.65%
2.68%
$0
$0 p.a.
90%
A competitive variable rate for home buyers with 10% deposits saved. Optional offset account (with $10 monthly fee).
Athena Celebrate Home Loan - 60% LVR  Investor, P&I
2.79%
2.79%
$0
$0 p.a.
60%
Investors with large deposits can get this low variable rate. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
Well Home Loans Balanced Fixed Home Loan - 2 Year (Owner occupier, P&I)
2.22%
2.21%
$250
$0 p.a.
90%
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.
homeloans.com.au Low Rate Home Loan with Offset - LVR 80% to 90% (Owner Occupier, P&I)
2.74%
2.76%
$0
$0 p.a.
90%
Save on interest with a free 100% offset account and buy your property with just a 10% deposit. This loan is not available for construction.
BankSA Basic Home Loan - Owner Occupier, P&I
2.64%
2.66%
$0
$0 p.a.
80%
Up to $4,000 refinance cashback
A competitive variable rate loan from BankSA. Refinancers borrowing $200,000 or more can get up $4,000 cashback for their first application (Other terms, conditions and exclusions apply).
UBank UHomeLoan Variable Rate - Discount Offer for Investor Variable P&I Rate
2.89%
2.89%
$0
$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier, P&I)
2.54%
3.98%
$595
$0 p.a.
95%
$2,000 refinance cashback
Borrow up to 95% LVR of the value of the property you're buying and pay no ongoing fees. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)
2.54%
2.46%
$0
$0 p.a.
80%
A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan. This rate will drop to 2.54% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.
HSBC Home Value Loan - Promotional Offer LVR 90% (Owner Occupier, P&I)
2.69%
2.70%
$0
$0 p.a.
90%
A competitive value home loan with no ongoing fee.
IMB Budget Home Loan - Special LVR  ≤90% (Owner Occupier, P&I, NSW and ACT borrowers only)
2.78%
2.84%
$449
$0 p.a.
90%
NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.
Athena Evaporate Home Loan - 60% to 70% LVR  Owner Occupier, P&I
2.49%
2.43%
$0
$0 p.a.
70%
A low variable rate for owner occupiers with 30% deposits. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
UBank UHomeLoan - 3 Year Fixed Rate (Investor, P&I)
2.29%
2.74%
$395
$0 p.a.
80%
Pay no ongoing fees on this investment loan fixed for 3 years.
Athena Evaporate Home Loan - 60% to 70% LVR  Investor, P&I
2.89%
2.83%
$0
$0 p.a.
70%
This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
Newcastle Permanent Building Society Real Deal Home Loan - Special Offer 1 (Owner Occupier, P&I)
2.59%
2.63%
$595
$0 p.a.
80%
$2,000 refinance cashback
$2,000 cashback for eligible refinancers borrowing $250,000 or more.
Well Home Loans Balanced Variable - LVR 90% (Owner occupier, P&I)
2.52%
2.55%
$250
$0 p.a.
90%
A very low variable interest rate for borrowers with a 10% deposit. Add a 100% offset account for $10 a month. Not available for construction purposes.
Heritage Bank Advantage Package - 1 Year Fixed (Owner Occupier, P&I) New Customers Only
2.59%
3.32%
$0
$350 p.a.
95%
Get a partial offset account and flexible repayments with this package loan.
Suncorp Home Package Plus Fixed - 2 Year Fixed Rate Special Offer $150k+ LVR ≤90% (Owner Occupier, P&I)
2.29%
3.28%
$0
$375 p.a.
90%
A low fixed rate loan available for borrowers with 10% deposits. Refinance to an eligible Suncorp loan and get a cashback of $2,000 or $3,000, depending on your loan amount. Other conditions apply.
Bluestone Prime Direct (Owner Occupier, P&I)
2.49%
2.51%
$0
$0 p.a.
70%
Bluestone's Prime Direct is a competitive variable rate home loan for borrowers with 30% deposits.
HSBC Fixed Rate Home Loan - 2 Year Fixed Rate LVR 80% or below (Owner Occupier, P&I)
2.09%
2.98%
$0
$0 p.a.
80%
Lock in a competitive fixed rate for 2 years and buy your home with a 20% deposit.
UBank UHomeLoan - 3 Year Fixed Rate (Owner Occupier, P&I)
2.14%
2.41%
$395
$0 p.a.
80%
A competitive fixed interest rate loan with no ongoing fees. Requires a 20% deposit.
homeloans.com.au Low Rate Home Loan with Offset - LVR 60% to 80% (Owner Occupier, P&I)
2.54%
2.56%
$0
$0 p.a.
90%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments. This loan is not available for construction.
UBank UHomeLoan - 1 Year Fixed Rate (Owner Occupier, P&I)
2.14%
2.46%
$395
$0 p.a.
80%
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.
Heritage Bank Fixed Rate Home Loan - 2 Year Fixed Rate (Owner Occupier, P&I) New Customers Only
2.59%
4.26%
$600
$8 monthly ($96 p.a.)
95%
Get a partial offset account and the option to make interest-only repayments.
G&C Mutual Bank Momentum Home Loan - LVR <50% (Owner Occupier, P&I)
2.55%
2.57%
$0
$0 p.a.
A variable rate loan for owner-occupiers looking to refinance. This loan has low fees and a 100% offset account.
Athena Liberate Home Loan - 70% to 80% LVR Investor, P&I
2.94%
2.87%
$0
$0 p.a.
80%
A competitive investor variable rate that falls as you build equity. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Owner Occupier, P&I)
2.49%
4.12%
$595
$0 p.a.
90%
$2,000 refinance cashback
Investors can take advantage of a short term fixed rate with no ongoing fees. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
Heritage Bank Discount Variable Home Loan - LVR ≤ 80% (Owner Occupier, P&I) New Customers Only
2.78%
2.80%
$600
$0 p.a.
80%
Family guarantee option available. Enjoy flexible repayments and a low minimum loan amount.
Athena Variable Home Loan - Investor, IO (*now 3.09%, drops to 3.04% on 30 Sep)
3.04%
2.93%
$0
$0 p.a.
80%
A competitive interest-only investor rate with no application or ongoing fees. Requires a 20% deposit. This rate will drop to 3.04% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer Discount 1 ($150k+ Owner Occupier, P&I)
2.94%
3.34%
$0
$395 p.a.
95%
$2,000 refinance cashback
New borrowers or refinancers can get a discounted rate with this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
Athena Variable Home Loan - Owner Occupier, IO (*now 3.09%, drops to 3.04% on 30 Sep)
3.04%
2.68%
$0
$0 p.a.
80%
Owner occupiers can refinance to one of the most competitive interest-only rates in the market. No application fee and no ongoing fees. This rate will drop to 3.04% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.
AMP Bank Essential Home Loan  -  $100,000 and above (Owner Occupier, P&I)
3.34%
3.37%
$0
$0 p.a.
90%
For a limited time, pay no application or settlement fees. You can also take advantage of a free redraw facility.
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Logo for Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)

Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.

Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Up to $4,000 refinance cashback. A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get up $4,000 cashback for their first application (Other terms, conditions and exclusions apply).

Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan. This rate will drop to 2.54% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.

Logo for UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate

Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.

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2 Responses

  1. Default Gravatar
    WetworkerNovember 16, 2016

    My wife and I are hoping to buy a home very soon. We have deposit in bank of about 20% of the value of homes we are looking at. Most of this is proceeds from the sale of my wife’s house and some savings we have added in last 6 months. Repayments will be quite comfortable, considerably less than we are paying as rent and allow room for interest rate increases without stressing much.

    The sticky bit is I have a tax debt. The debt arose when I was operating a small business a number of years ago and wasn’t diligent in getting activity statements and returns done as I should have. This debt was incurred before I met my wife. I have made some contribution toward paying the debt. I have contacted the accountant that prepared my returns for the years in question to try to get the activity statements completed. When he was preparing the returns he didn’t think they would be required as he was confident the ATO would release the debt. I was unemployed and on sickness benefit for a period of time and ATO did release the debt. When I started working and lodged a tax return the debt was reinstated about 12 months ago. The debt was raised 7-9 years ago.

    As I understand home loan requirements (I have never had a home loan or owned/part owned a home)the Lender would prefer the loan to be in both our names (joint application). If we do this would the ATO be able to prevent the loan or force us to sell it to cover the debt that I have?
    Alternatively, If the loan was in my wife’s name only would the ATO have a problem with that? As I earn more than my wife some of my income would go toward servicing the loan. It might be possible for my wife’s income to service the loan and my income used for food, fuel, car expenses, etc so I wasn’t actually contributing to the payment of the mortgage.

    Constructive advice appreciated.

    • Avatarfinder Customer Care
      MayNovember 22, 2016Staff

      Hi Wetworker,

      Thank you for contacting finder.com.au – a financial comparison website and general information service designed to help consumers make better decisions.

      Sorry for the delayed reply. Generally, all lenders will assess their applicant’s financial position and will take into account including but not limited to your assets, income, other debts and liabilities, credit rating, etc. So either you or your spouse will apply for the loan, the same assessment will be done. Obviously, you’ll need to be in good standing in your financial position as that would tell your capability of paying off the loan.

      Furthermore, whether you or your spouse will apply for the loan, as you have an outstanding debt with ATO, most likely your tax debt and repayments history are critical factors that a lender will consider in approving your loan application.

      Nonetheless, you still have the option to refinance your tax debt and combine it with the new home loan you take out. Unfortunately, most banks do not offer to refinance your tax debt, but some non-bank lenders may be able to help. You can discuss your loan options by contacting a non-bank lender featured on this page. Again, your approval will still be on a case-by-case basis, depending on their assessment financial circumstance.

      Hope this helps.

      Cheers,
      May

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