Quick answer
Lodging overdue BAS before you apply is one of the most useful things you can do, even if you can't pay what's owed. Lenders need to know your true tax position, and unlodged BAS makes that impossible. Lodging also stops failure-to-lodge penalties growing and opens the door to an ATO payment plan. A lodged BAS with a plan reads far better than an unknown.
Key points
- Lodge even if you can't pay; the two are separate.
- Unlodged BAS leaves lenders with an unknown tax position.
- Lodging opens the way to an ATO payment plan.
- A current ATO portal statement answers most lender questions.
Plenty of owners stop lodging BAS when they can’t pay it. It feels logical: if there’s no money to cover the bill, why lodge a form that says how much you owe? But for anyone hoping to borrow, it’s one of the most damaging habits in small business finance. Not because lenders expect your tax to be fully paid, but because they need to know what’s owed.
This guide explains why lodging comes first, how lenders read your tax position and a simple plan to get current before you apply.
This is general information. For your own situation, speak with your registered tax or BAS agent.
Lodging and paying are separate
The most important thing to understand is that lodging a BAS and paying a BAS are two different obligations. You can lodge and pay in full, lodge and pay part, or lodge and arrange a payment plan. What you shouldn’t do is not lodge at all.
When you don’t lodge:
- The ATO doesn’t know your actual position and may estimate it.
- Failure-to-lodge penalties can apply.
- You generally can’t set up a payment plan for amounts that haven’t been lodged.
- Any lender reviewing your application sees an unknown.
When you lodge, even without paying, the number becomes known. And a known number can be planned around.
Why unknown tax worries lenders
Imagine you’re a lender. An applicant has strong bank statements, a solid business and wants a loan. But they have four BAS quarters unlodged. You don’t know if they owe a few thousand or a hundred thousand. You don’t know whether the ATO will take recovery action next month. You don’t know whether some of that cash flow in their statements is actually GST that should be going to the ATO.
That uncertainty is what kills applications. Lenders can work with tax debt. Many specialist loans are designed to clear it. What they can’t work with is not knowing.
How lenders read your ATO position
| What they see | How it reads |
|---|---|
| All BAS lodged, nothing owed | Excellent |
| All lodged, debt on a payment plan being met | Generally acceptable |
| All lodged, debt with no plan | A concern, but workable |
| Some unlodged, small debt | Uncertain; explain and lodge |
| Several unlodged, unknown debt | Major concern for most lenders |
| Debt reported to credit bureaus | Significant hurdle |
The difference between the bottom rows and the top rows is often just a few weeks of catching up.
Credit reporting and director penalties
There are two more reasons to get your BAS current.
Tax debt reporting. The ATO can report business tax debts to credit reporting bureaus when they meet certain criteria, including being overdue and not being actively managed, for example through a payment plan. A reported debt can affect your ability to borrow and your relationships with suppliers.
Director penalties. For companies, directors can become personally liable for certain unpaid amounts like PAYG withholding and superannuation guarantee. Lodging on time can affect the options available to directors under the director penalty regime. Our page on company director loans explains more.
A step-by-step catch-up plan
Step 1: Find out where you stand
Log in to ATO online services or ask your BAS agent for your current portal statement. Note every outstanding lodgement and the current balance.
Step 2: Gather your records
For each unlodged quarter, you’ll need sales, purchases, GST collected and paid, and wages paid. If your bookkeeping is behind, start with the oldest quarter and work forward.
Step 3: Lodge, oldest first
Lodge each outstanding BAS, even if you can’t pay. Your BAS agent can do this for you and may be able to help with lodgement timing.
Step 4: Contact the ATO about paying
Once lodged, look at the total owed. For smaller debts, a payment plan can often be set up online. For larger ones, call the ATO or have your agent do so. Propose an amount you can genuinely meet, not one that sounds impressive.
Step 5: Keep up the current quarter
The fastest way to undo good work is to fall behind again. Set aside GST and PAYG from each deposit into a separate account, so the next BAS is covered.
Step 6: Download a fresh portal statement
Before you apply for a loan, download a current statement showing everything lodged and any plan in place. It answers the tax question in one page.
How long it takes
| Situation | Typical catch-up time |
|---|---|
| One quarter behind, books up to date | A few days |
| Two or three quarters, books mostly current | One to three weeks |
| A year or more behind, books behind too | One to two months |
Even if you can’t finish before you apply, being able to show that you’ve started, with a date for the rest, makes a meaningful difference.
An illustrative example
A Rockhampton earthmoving contractor stopped lodging BAS during a slow wet season and is now three quarters behind. He wants a $60,000 loan for a second excavator to take on a mining services contract. His first instinct is to apply now and sort out the BAS later. Instead, his BAS agent lodges all three quarters over two weeks, revealing $38,000 owed. He sets up a payment plan with the ATO and downloads a current portal statement. A low doc lender, now able to see the full tax picture and a plan being met, approves a smaller loan for the excavator, with the payment plan factored into affordability. Illustrative only.
What to tell the lender
Be upfront. A short explanation covers it: what happened, when you caught up, what’s owed, what plan is in place and how you’re preventing it happening again. Attach the portal statement. That’s the kind of disclosure that turns a tax debt from a red flag into a managed fact.
When to get help
If the amount owed is larger than the business can realistically repay, or the ATO has started recovery action, speak with your accountant or a qualified adviser before taking on new debt. Business.gov.au lists free small business financial counselling services in each state, and many owners find a single conversation helps them see the options clearly.
Common worries, answered
Owners who are behind often hold off because of a few specific fears. One is that lodging will trigger immediate recovery action. In practice, the ATO generally prefers to work with businesses that engage, and lodging is usually the first step toward a manageable plan rather than enforcement. Another is that the figure will be far bigger than expected. Sometimes it is, but knowing the true number is still better than guessing, and it lets you and your adviser plan properly. A third is embarrassment about how far behind things have slipped. Tax agents and lenders see this constantly, and the owners who catch up and explain clearly are treated far better than those who stay silent.
Your next step
Tell us where your BAS lodgements stand, roughly what’s owed and what you need the funds for. There’s no credit check to make an enquiry, your details aren’t spread across a crowd of lenders, and one real person reviews it and calls you. Accurate answers about tax help us choose the right lender first time. Start your enquiry here.
Frequently asked questions
Can I lodge BAS without paying?
Yes. Lodging and paying are separate. You can lodge on time or late and then pay in full, pay part or arrange a payment plan.
Will lodging late trigger penalties?
The ATO can apply failure-to-lodge penalties for late BAS. Lodging sooner rather than later limits them, and the ATO may consider remission in some circumstances.
How do I see what I owe the ATO?
Through ATO online services for business or via your registered tax or BAS agent. The portal statement shows lodgements, balances and any payment plan.
Do lenders check ATO debt?
Most ask, many request an ATO portal statement, and larger business tax debts can be reported to credit bureaus. It's best to be upfront.
What if I owe more than I thought?
Talk to the ATO early about a payment plan, and to your accountant about options. Some business loans are designed to clear ATO debt.