Refinancing ATO debt before a director penalty notice deadline

The situation

The scenario below is an anonymised composite reflecting a pattern we see regularly, not a specific settled deal. A trading business falls behind on PAYG withholding and superannuation guarantee charge over a difficult two quarters, and the director receives a director penalty notice from the Australian Taxation Office. The notice sets a strict deadline, after which the director becomes personally liable for the debt unless it is addressed. The business is otherwise trading, with reasonable revenue and a handful of company-owned or director-owned property assets, but does not have the cash on hand to clear the debt outright.

Why it's hard

A DPN compresses a genuinely difficult financial position into a very short window, and the type of notice matters enormously: a lockdown DPN, issued where the underlying liability was never reported to the ATO, leaves the director personally liable regardless of what is done after the deadline, while a non-lockdown notice still allows options such as placing the company into administration to avoid personal exposure.⚠ Time pressure alone rules out a standard bank process, and any BAS lodged late in the lead-up can complicate how a lender reads the business's broader compliance history, even where the underlying trading is sound.

How it can be structured

A caveat loan against a director's or company's property equity is the fastest option, typically funded in one to three business days, clearing the ATO debt in full before the deadline and bought time to arrange a longer-term facility afterwards; the exit here is usually a planned refinance into a term facility once the immediate deadline pressure has passed. An ATO debt refinance product structured directly against business assets or a general security agreement is a second path, better suited where the business has strong trading fundamentals but limited property security, matching the facility term to the business's actual cash flow recovery. Where more runway is needed and the director holds meaningful property equity, a second mortgage behind an existing bank facility can also clear the debt, provided the first mortgagee's consent or a deed of priority can be arranged inside the deadline, which is not always realistic given the timeframe involved.

What it typically costs

Pricing on a facility arranged this quickly reflects the urgency and the light documentation involved rather than a standard commercial rate, and is quoted on enquiry once a lender has reviewed the security and the exit. An establishment fee is standard, and borrowers should expect a facility priced for speed rather than for the lowest possible long-term cost, since the point of the exercise is resolving a personal liability risk within days, not optimising for rate.

Timeline

1. Same day — scoping call to confirm the DPN type, deadline and available security.
2. Same day to 1 business day — title search and indicative terms from lenders suited to the timeframe.
3. 1–2 business days — credit approval and loan offer.
4. 1–2 business days — settlement and funds released to clear the ATO debt before the deadline.

Questions we'd ask you

1. Is this a lockdown or non-lockdown DPN, and what is the exact deadline?
2. What property or business assets are available as security, and is there an existing mortgage over them?
3. Has the underlying BAS or superannuation guarantee liability now been correctly reported to the ATO?
4. What is the business's current trading position, and can it service a facility once the immediate debt is cleared?
5. Have you engaged an accountant or insolvency adviser on the notice itself, separate from the finance question?⚠

Related

ATO debt refinance · Short-term business loans · Directors with ATO debt