Quick answer
Tax time cash crunches happen when BAS, PAYG withholding and income tax fall due at the same time as normal costs, and the money collected for them has been spent on running the business. The best defence is forecasting tax and setting it aside each week. If a shortfall comes anyway, options include an ATO payment plan, a short-term working capital loan or a property-secured loan for larger debts.
Key points
- GST and PAYG withheld are not your money to spend.
- Forecast every tax due date for the year ahead.
- Set tax aside in a separate account each week.
- Lodge on time even when you can't pay in full.
- Compare a payment plan and a loan on total cost and stress.
Every company knows tax is coming, but many still get caught short. BAS arrives monthly or quarterly, PAYG withholding builds with every pay run, superannuation guarantee payments fall due on their own schedule, and the company’s income tax bill lands after year end. If the cash collected for those amounts has been used to run the business in the meantime, the due date can trigger a crisis.
The good news is that tax is predictable. With some planning, most tax time cash crunches can be avoided. And if one happens anyway, there are sensible ways through it.
Why tax catches companies out
The root cause is usually simple: money collected on behalf of the ATO sits in the business account and gets spent. GST collected on sales, and PAYG withheld from wages, feel like business income because they’re in the bank. They aren’t. They belong to the ATO, and they’ll be due on a set date.
Growth makes it worse. A growing company collects more GST and withholds more PAYG, while also spending more on stock, staff and equipment. The tax liability rises at the same time as cash gets tighter. Then a big income tax bill arrives for a profitable year that has already been reinvested.
Step one: map every tax date
Start with a simple calendar for the next twelve months. Mark every BAS due date, PAYG instalment, superannuation payment date and the expected date of the company income tax payment. Your accountant or the ATO’s online services can confirm the exact dates.
Beside each date, estimate the amount. Your recent BAS lodgements give a good base, adjusted for growth or seasonal changes. For income tax, ask your accountant for an estimate based on year-to-date profit.
This calendar is your early warning system. It shows which months will be tight, often months in advance.
Step two: set tax aside every week
The most effective habit is to move tax money into a separate account as you go. Each week, or each time you’re paid, transfer the GST collected, the PAYG withheld and a percentage of profit for income tax. When the bill arrives, the money is waiting.
It can feel painful at first, especially if cash is already tight. But it turns a large, stressful lump sum into a steady weekly cost, and it gives you a clear view of your true cash position. business.gov.au publishes practical guidance on managing cash flow that includes this kind of approach.
Step three: lodge on time, always
Even when you can’t pay, lodge. Late lodgement can lead to penalties and, more importantly, makes it much harder to arrange a payment plan or a loan. Lenders treat unlodged returns as a serious concern because they can’t verify your income or your tax position. A debt that’s lodged and known is far easier to deal with than one that’s hidden in unlodged returns.
Step four: if there’s a shortfall, choose the right fix
If a tax bill is coming and the money isn’t there, act early. Common options include:
An ATO payment plan. The ATO offers payment plans for many businesses, which spread the debt over time. For smaller debts, this can be the simplest and cheapest option. Check what’s available and the interest charges that apply.
A short-term working capital loan. For a temporary shortfall that will be covered by upcoming income, a short-term working capital loan can pay the bill on time and spread the cost over a few months.
A line of credit. If tax time pinches every year, a standby line of credit can absorb the peak and be repaid as income comes in.
A property-secured loan. For larger tax debts, especially when the ATO has already issued notices, a property-secured loan such as a caveat loan or second mortgage can clear the debt quickly, with the lender often paying the ATO at settlement.
Our page on ATO debt and business loans explains how lenders view tax debts and what they’ll ask for.
Payment plan or loan: how to decide
Compare the total cost of each option over the period you’d need it, including interest charges and fees. Consider the monthly commitment and whether it’s affordable alongside future tax obligations, because a plan or loan for last year’s tax doesn’t stop this year’s tax from building. Think about the stress factor, too. Some owners prefer to clear the ATO entirely and deal with one structured repayment instead.
Your accountant can help you weigh the tax consequences of each option. If the company is under serious financial pressure, getting professional advice early is important.
Don’t fall into the repeat trap
The risk with any tax fix is repeating the problem next quarter. If you borrow to pay this BAS but don’t set aside money for the next one, you’ll be back where you started with a loan on top. Pair any fix with the weekly set-aside habit so the next bill is covered as it builds.
Superannuation deserves its own line
Superannuation guarantee payments are easy to overlook in a cash plan because they’re not part of the BAS. Under the Payday Super rules that started on 1 July 2026, super is now due within days of each payday rather than quarterly, so it lands far more often. Missed payments carry serious consequences, including charges that can’t be claimed as a deduction. Treat super like GST and PAYG withholding: money set aside as wages are paid, held separately and paid on time. If super has fallen behind, talk to your accountant straight away about catching up. Lenders who see unpaid super in a file treat it as a significant warning sign, much like an unmanaged tax debt.
Plan for the year after a strong year
A profitable year brings a bigger income tax bill and, often, higher PAYG instalments for the following year, both at once. That combination catches many growing companies out. Ask your accountant early what the next year’s instalments are likely to be, and add them to your tax calendar so the increase doesn’t arrive as a surprise.
A worked example
A Perth landscaping company has grown quickly. Its quarterly BAS has doubled in a year, and the income tax bill for a strong year is due at the same time as a winter slowdown. The owners haven’t been setting tax aside. They lodge on time, then compare an ATO payment plan with a short-term loan. The loan clears the ATO in one step and is repaid over six months as spring work picks up. At the same time, they open a separate tax account and start transferring GST and PAYG each week. The next quarter’s BAS is paid from that account in full.
Plan your next tax date now
Tell us what’s due, when and what your cash looks like through our short enquiry form. There’s no credit check to enquire, one team handles your file, and a real person will help you weigh a payment plan, a loan or a combination before the due date arrives. Plan for the tax bill.
Frequently asked questions
Should I keep a separate account for tax?
It's one of the simplest and most effective habits. Moving GST, PAYG withholding and an estimate of income tax into a separate account each week means the money is there when the bill arrives.
Is it better to use an ATO payment plan or a loan?
It depends on the debt size, the plan terms available, interest charges and your other commitments. A plan may be cheapest for smaller debts; a loan may help for larger debts or when you want to clear the ATO entirely.
What happens if I lodge late?
Late lodgement can lead to penalties and makes it harder to arrange a payment plan or loan. Lodging on time, even without full payment, keeps more options open.
Can a lender pay the ATO directly?
Many lenders funding tax debts pay the ATO directly at settlement, so the debt is cleared on day one.