ATO Tax Debt Consolidation Calculator

How Consolidating ATO Debt into a Home Loan May Help Manage Costs

Carrying a tax debt with the Australian Taxation Office (ATO) has become more costly due to recent regulatory changes.

• The 10.96% GIC Rate: The ATO’s General Interest Charge (GIC) currently sits at 10.96% p.a. (for the April–June 2026 quarter) and compounds daily. This is notably higher than typical Australian home loan rates, which frequently average between 6.0% and 7.5% p.a.
• The Tax Law Change: Effective 1 July 2025, ATO interest charges (GIC and SIC) are no longer tax-deductible. Because individuals and businesses can no longer claim these costs on their tax returns, carrying an outstanding tax balance can introduce a direct, un-offset impact on cash flow.

By exploring options to refinance your mortgage and access property equity, eligible borrowers may be able to clear their ATO debt in full and transfer a higher-interest, daily compounding tax debt into a lower home loan interest rate. However, the long-term impact on your overall financial position depends on your strategy, as extending short-term debt over a longer mortgage term can affect the total interest paid over time.

Will Lenders Allow Me to Refinance for Tax Debt?

Yes, lenders will allow you to consolidate your ATO debt by refinancing.

We have lenders on our panel who can help you consolidate your ATO tax debt.

Eligibility criteria vary across lenders but they will generally assess an application based on:

• Property Equity: Borrowers typically require a Loan-to-Value Ratio (LVR) of 80% or less to manage risk parameters, though some specialist lenders may consider applications up to 90% LVR.
• Serviceability: Applicants must demonstrate that their income can comfortably cover the updated, larger total home loan commitment.
• Account History: Lenders generally require a current ATO portal printout to see proactive steps toward debt management rather than unmanaged outstanding liabilities.