Using home equity to pay an ATO debt: who signs, how fast, and how you get out of it

When a business owes the ATO and the bank won’t help, the family home is often the biggest pool of equity anyone has. Using it is a serious decision, and it should be. Done properly, it can turn a growing, compounding tax debt into a single short-term loan with a fixed end point. This page covers the parts owners ask about most: the bank, the signatures, the speed and how the loan ends without selling the house.

Can you use your home equity to pay a business tax debt?

Yes. The loan is a short-term business loan secured over your home, sitting behind your existing home loan. Its purpose is to pay the business’s tax debt, which might be BAS, GST, PAYG withholding, company tax or super guarantee charge. You sign a declaration that the money is for business purposes, because we only lend for business purposes.

How it’s secured depends on where the home is:

• Victoria: a caveat loan, with a caveat lodged on the title behind your bank.
• Every other state and territory: a short-term registered second mortgage, which does the same job and is usually arranged just as quickly.
• No home loan at all: a short-term first mortgage.

Why bother, rather than leaving the debt with the ATO? The general interest charge is calculated daily on a compounding basis, and the ATO now says GIC incurred on or after 1 July 2025 can’t be claimed as a deduction. If at least $100,000 has been overdue for more than 90 days and the business isn’t engaging with the ATO, the ATO may report the debt to credit reporting bureaus after giving 28 days’ notice. It can also issue garnishee notices to your bank, to customers who owe you money and, in a property sale, to the solicitors, agents or buyers involved. Clearing the debt in one payment takes all of that off the table.

Will your bank top up your home loan to pay the ATO?

Sometimes, but often not in time. A bank treats a top-up like a new long-term loan. It wants recent tax returns, current financials and a clean credit picture, and it tests whether you can repay over decades. A business with an ATO debt is very often a business with lodgements running late, which stalls the application before it starts. If the ATO has already listed the debt, many banks won’t go further at all.

We look at it differently. Our credit team starts with the equity in the home and a believable way out of the loan, then works back to the paperwork. If the bank has already said no, our bank said no page explains what usually comes next.

Who has to sign if the home is jointly owned?

Every registered owner. No lender can take security over a property unless all its owners agree, so a spouse or partner who has nothing to do with the business signs too.

Who	What they sign	Why
Borrower (company or sole trader)	Loan agreement	It owes the money
Every director of a company borrower	Guarantee	Standard on company lending
Every registered owner of the home	Mortgage, and in Victoria the consent to our caveat	It’s their property being used as security

We recommend a non-business owner gets their own independent legal advice before signing. It protects them and it protects the loan. A sit-down with a solicitor can usually happen within a day, and it’s worth booking early. Our page on using your home as security covers the wider picture.

If the ATO has put a date on the table, start your enquiry now so the signing can be organised around it.

How fast can home equity clear an ATO debt?

Possibly faster than you’d expect. Where the home secures the loan, same-day funding is possible for amounts from $20k to $250k, and larger loans up to $5m can be possible within 24–48 hours. “Possible” depends on a few things you control:

1. An ATO payoff figure from your portal or your tax agent, including GIC to the expected payment date.
2. Your home loan balance, from a recent statement.
3. Every owner available to sign and be identified, in person or electronically.
4. The valuation booked early. Suburban houses are usually the quickest property to value.

On a Victorian home the caveat is lodged electronically with Land Services Victoria. Interstate, the second mortgage goes through that state’s registry. Either way, ask for the loan funds to be paid straight to the ATO using your payment reference. That leaves a clean record that the debt has been paid.

How do you repay it without selling the house?

You choose the exit before you borrow, and it’s rarely the house. Common ones:

• Refinance to a bank once lodgements are up to date and the tax debt is gone, which is when banks become willing again.
• Money owed to the business: a retention, a large invoice or a contract milestone.
• Selling a different asset, such as equipment, a vehicle or an investment property.
• Trading cash flow over a defined number of months, where the numbers clearly support it.

Short-term loans are measured in months, not decades. Use our exit date check to test whether your repayment source lands in time, and talk to us early if anything moves.

An illustrative example: a 28-day notice in Adelaide

Illustrative only. Round numbers, no real people.

A joinery company owes the ATO $180,000 in BAS and PAYG withholding, and the directors have received a notice that the debt may be reported to credit bureaus. The bank declined a top-up because the latest company tax return isn’t lodged.

The family home in Adelaide is worth about $950,000 with $410,000 owing to the bank. It’s owned jointly by the director and his wife, who works as a nurse and has no role in the company. Because the home is in South Australia, we use a short-term registered second mortgage of $185,000. Combined lending is about $600,000 plus costs, close to 63 per cent of the value.

Both owners sign, and his wife sees her own solicitor first. The ATO is paid in full from the loan inside the notice period. The exit is a refinance into a bank facility once the overdue returns are lodged, helped by a retention payment due from a builder.

Tax debt and a home with equity? Find out where you stand

We deal with business tax debt every week, and we don’t treat it as a reason to say no. Tell us what’s owed, what the home is worth and who owns it, and we’ll give you a straight answer on speed and structure.

Allow about 60 seconds for the form. Making that first enquiry involves no credit check, and your details aren’t fired off to a long list of lenders. One team reviews them and a real person calls you. Please be accurate about the property, its state, every owner’s name and the ATO’s deadline so the first answer is the right one.

Clear the ATO debt: check your options →