Mr says
Often, yes. An ATO review or audit isn't a debt, a default or a black mark on your credit file, so it doesn't automatically stop a business loan. What lenders worry about is the unknown: how big an amended assessment might be and whether you can pay it. Disclose the audit up front, bring your accountant's view of the likely outcome, and choose a loan that leaves room for a possible tax bill.
Key points
- A review or audit is a check, not a debt. It doesn't appear on your credit file.
- Lenders price the uncertainty, so an accountant's estimate of the outcome helps a lot.
- Always disclose an open audit. Hiding it is what sinks applications.
- Disputing an ATO decision generally doesn't change the due date, but a 50:50 arrangement can pause recovery and halve the GIC.
- Plan the loan around a possible bill, not just the thing you want to buy.
Mr says: an audit letter is not a “no”. Plenty of Australian businesses borrow while the ATO is going through their books. A review or audit isn’t a debt and it doesn’t sit on your credit file. What it creates is uncertainty, and lenders hate uncertainty more than they hate bad news. Your job is to shrink the unknown: disclose it, put a likely number on it and borrow with room to spare.
That’s the short version. Here’s how it plays out in practice.
Why does an audit make lenders nervous at all?
Picture it from the lender’s side of the desk. They’re about to lend against your last two years of financials and your recent BAS. The ATO has just said, in effect, “we’re not sure those numbers are right.”
Three questions follow:
- Are the figures we’re relying on going to change? If the audit finds understated income, the lender may be underwriting a business that looks different on paper next month.
- Is a tax bill coming, and how big? An amended assessment can bring extra tax, the general interest charge (GIC) and possibly penalties. That bill competes with the lender’s repayments.
- Is there something bigger going on? Most audits are routine. A lender just wants comfort that yours is too.
None of these is a rule that says “decline”. They’re questions. Answer them well and you’ve done most of the work.
Is a review the same as an audit?
Not quite, and it’s worth knowing which one you’ve got.
| ATO review | ATO audit | |
|---|---|---|
| What it is | A check of a specific area or risk | A closer examination of your records |
| Typical outcome | Often no change, or a small adjustment | More likely to lead to an amended assessment |
| How a lender reads it | Usually a minor note on the file | Wants an estimate of the likely result |
| What to bring | The ATO letter and your accountant’s comment | The letter, your accountant’s estimate and the timeline |
General description only. Your ATO correspondence and your accountant will tell you exactly what stage you’re at.
During an audit, the ATO usually sets out its findings in a position paper and gives you a chance to respond before it settles on a final position. For businesses with turnover under $10 million, the final audit position may come with an offer of an independent review by an ATO officer who wasn’t involved in the audit. You generally have 14 days from the offer to ask for it, and the review happens before any amended assessment issues. Super, fringe benefits tax, fraud or evasion findings and interest are outside that service.
Why does this matter for borrowing? Because each stage tells a lender how close you are to a known number.
Do I have to tell the lender?
Mr’s rule of thumb: if it’s in your ATO correspondence, it’s going in your loan file. Tell them first.
Lenders see tax matters in more places than owners expect: integrated client account statements, payment plan history, accountant letters, and sometimes a notice of amended assessment that turns up while your application is in progress. If an audit comes to light after you’ve said “nothing to report”, the conversation stops being about the audit and starts being about trust.
Disclosed early, an open audit is usually just a line in the assessment notes. Discovered late, it’s one of the most common reasons a promising deal falls over. Mr covers the others in why was my business loan declined?
What should I bring to the conversation?
You can’t make the audit go away, but you can make it measurable. Pull together:
- The ATO letters so far: what’s being looked at, which years or periods, and what stage you’re at.
- A short note from your accountant giving their honest view: the issue, the likely range of any adjustment, and whether you plan to accept or dispute it. Even a rough range is far more useful than silence.
- Your lodgement status. Up-to-date BAS and tax returns show the audit is a one-off question, not a pattern. Behind on lodgements? Fix that first; it matters more than the audit.
- Your current ATO balance and any payment plan in place.
- The usual loan documents: bank statements, financials, ID. Mr’s full list is in what documents do I need for a business loan?
Got an open audit and a funding need that won’t wait? Tell Mr what’s going on. No credit check to enquire, and a real person reads it.
Will the lender want to see the outcome first?
Some will. Many will look at the whole picture instead.
Mainstream banks tend to prefer clean, settled tax affairs and may ask you to come back after the audit closes. Specialist and private lenders are often more willing to work with an open audit, especially when the likely adjustment is small next to the business’s turnover or the property security on offer. Mr’s view on who to ask first is in private lender or bank.
What usually helps:
- Sizing the loan for a possible bill. If your accountant thinks the worst case is, say, $30k, borrowing exactly what you need for the new van with nothing to spare isn’t a plan. Leaving headroom, or keeping a buffer in the bank, shows you’ve thought it through.
- Security. A property-secured loan gives the lender comfort that doesn’t depend on the audit’s outcome. It also puts your property on the line, so weigh that properly.
- Timing. If the purchase can wait a few weeks until the final position arrives, you’ll often have more lenders to choose from.
What if the audit ends in a bill?
Then you have a known debt rather than an unknown one, which is oddly a better place to be for borrowing. Your main choices:
- Pay it from cash if you can do that without starving the business.
- Set up an ATO payment plan. Workable for many businesses, but GIC keeps accruing, and since 1 July 2025 it’s no longer tax-deductible. Mr explains why that changes the maths in ATO interest is no longer deductible.
- Borrow to clear it, on a term and structure you choose. Mr weighs the two side by side in ATO payment plan or business loan?
- Ask about remission of the GIC if something genuinely outside your control caused the late payment. The ATO’s examples of GIC remission requests show the kinds of circumstances it considers, such as natural disasters, the sudden collapse of a major debtor or serious illness.
If you’re borrowing with ATO debt already on the books, can I get a business loan with an ATO debt? covers what lenders look for.
What if I disagree with the result?
You can object, and many owners do. But two points catch people out.
First, the ATO says that disputing a decision will generally not change your due date. Interest can keep building on an unpaid disputed amount while you argue the point (ATO). The ATO usually holds off on recovery until a dispute is finalised, but that isn’t guaranteed.
Second, there’s a middle path most owners never hear about: the 50:50 arrangement. You pay any undisputed amount plus half of the primary disputed debt up front and help the ATO resolve the dispute. In return, the ATO generally defers recovery action and remits half the GIC on the unpaid balance while the dispute runs. If you win, the ATO refunds what it owes you. You can also write to the ATO asking to defer payment until the dispute is resolved; a good payment history helps.
Mr’s view: a 50:50 arrangement is often where a loan earns its keep. Borrowing the 50% caps your interest exposure, keeps recovery action at bay and lets you fight the point without a garnishee notice hanging over the business account.
A worked example from Geelong
This is an illustration, not a real client.
Dan runs a joinery business in Geelong through a company, turning over about $1.8m. In August, the ATO opens an audit into how the company claimed GST on a large equipment purchase. In September, a builder offers Dan a fit-out contract that needs a CNC router he doesn’t have, costing around $120k.
What Dan does well:
- He asks his accountant for a short letter. Her view: the worst case is roughly $25k of GST plus GIC, and she thinks it’s more likely to be smaller.
- His BAS and tax returns are all lodged on time, and there’s no existing ATO debt.
- He discloses the audit in his very first enquiry, with the ATO letter attached.
How it plays out: the bank he approaches first says to come back once the audit closes. A specialist lender looks at the full picture instead: the steady turnover, clean lodgement history and the accountant’s estimate. It structures funding for the router and suggests Dan keeps at least $25k aside in the business account until the audit is finalised.
If the audit had come back bigger: Dan’s accountant had already flagged the 50:50 route if they disagreed with the outcome, and they’d discussed a second-stage loan to fund the half payment. He was never caught flat-footed, which is the whole point.
Mr’s checklist when an audit and a loan collide
- Read the ATO letter properly: review or audit, what period, what stage.
- Get your accountant’s written view of the likely outcome.
- Bring all lodgements up to date before you apply.
- Disclose the audit in your first enquiry, not your last.
- Size the loan, or a cash buffer, to absorb a possible bill.
- Know your fallback: payment plan, borrowing, remission request or 50:50 arrangement.
- Diarise every ATO deadline, especially the 14-day window for an independent review.
An audit doesn’t have to stall your plans
Mr has seen good businesses sit on their hands for months because an audit letter arrived and they assumed borrowing was off the table. Usually it isn’t. It just needs an honest file and a lender willing to read the whole story, not only the scary part.
That’s what we do. Tell us what the money’s for, roughly how much you need, how the business is trading and where the audit is up to. The enquiry takes about 60 seconds and there’s no credit check when you first enquire. Your details aren’t fired off to a pile of lenders in the hope one bites, so you won’t be fielding calls all week. A real person reads your enquiry, thinks about your particular situation and rings you to talk it through. Please fill the form in accurately, audit and all, because the more we know up front, the better chance we have of matching the right option the first time.
Frequently asked questions
Does an ATO audit show up on my credit file?
No. A review or audit is the ATO checking your records, not a debt or a default. What can matter later is an unpaid tax debt: the ATO can report certain overdue business tax debts to credit reporting bureaus, so it pays to sort out any bill that comes out of the audit quickly.
Do I have to tell a lender the ATO is auditing me?
If you're asked about tax matters, or the audit could change your finances, you should tell them, and Mr's advice is to disclose it anyway. Lenders often find out through tax portal statements, accountant letters or a notice of amended assessment, and a surprise late in the process does far more damage than a frank answer at the start.
Can I borrow to pay a bill that comes out of an ATO audit?
Often, yes. Once an amended assessment has issued, the debt is a known number, which many lenders find easier to deal with than an open audit. Options range from an unsecured loan for smaller amounts to a property-secured loan for larger ones, considered case by case.
Should I wait until the audit finishes before applying?
It depends on timing and need. If the funding is for something time-sensitive and the likely adjustment is small, applying now with full disclosure can work. If the audit could produce a large bill and the purchase can wait, finishing the audit first usually gives you more options.
What is a 50:50 arrangement with the ATO?
If you dispute an ATO decision, you can ask to pay any undisputed debt plus half of the primary disputed amount up front. In return, the ATO generally defers recovery action and remits 50% of the general interest charge on the unpaid balance while the dispute runs. It's assessed case by case.
Is a review the same as an audit?
Not quite. A review is usually a lighter check that may end with no change at all, while an audit is a closer examination that's more likely to lead to an amended assessment. Either way, take it seriously, get your accountant involved early and keep your lodgements up to date.