Quick answer
A business loan can pay a BAS, PAYG or income tax bill when the business is sound but cash is short at the due date. It makes most sense when lodgements are current, the total cost of the loan compares well with the cost of carrying the debt, and there's a plan to stay current. Always lodge on time, and contact the ATO before the due date if you can't pay.
Key points
- Lodge on time even if you can't pay in full
- Quarterly BAS: 28 October, 28 February, 28 April, 28 July
- Compare the loan's total cost with GIC and the risk of escalation
- A loan only helps if future BAS can be met as it falls due
- Monthly BAS due
- 21st of the following month
- Quarterly BAS due
- 28 Oct, 28 Feb, 28 Apr, 28 Jul
- Unpaid amounts
- General interest charge applies
Why do tax bills catch good businesses out?
Because GST, PAYG withholding and PAYG instalments are collected over weeks or months and paid in one hit. The money passes through the business account in the meantime, and it’s easy for it to get spent on stock, wages or a slow month. When the due date arrives, the cash isn’t there — even though the business is profitable.
That’s why BAS time is one of the most common “before you knew you needed finance” moments. It’s also one where the right move depends on your specific situation.
When is BAS due?
The ATO sets the dates:
| BAS type | Period | Due date |
|---|---|---|
| Monthly | Each month | 21st of the following month |
| Quarterly | July–September | 28 October |
| Quarterly | October–December | 28 February |
| Quarterly | January–March | 28 April |
| Quarterly | April–June | 28 July |
The ATO says businesses that lodge online may be eligible for an extra two weeks to lodge and pay quarterly BAS, and that lodging through a registered tax or BAS agent may also give extra time. The October–December quarter already includes an extension, so the extra two weeks doesn’t apply to it.
Lodge first, always
Whatever you decide about paying, lodge on time. The ATO says lodging on time ensures your information is up to date, and asks businesses that can’t lodge or pay in full to contact it before the due date. A general interest charge applies to any amount not paid by the due date.
For lenders, up-to-date lodgement is one of the strongest signals a business can send. Our page on ATO debt explains why lodgement often matters more than the balance.
Tax bill due soon? Start a 60-second enquiry — no credit check when you first enquire.
Loan or payment plan?
| ATO payment plan | Business loan | |
|---|---|---|
| Clears the ATO debt now | No — spread over time | Yes |
| Ongoing charge | GIC keeps accruing on the unpaid balance | The loan’s total cost of finance |
| Eligibility | ATO considers many factors; not guaranteed | Assessed on the business and any security |
| Suits | Smaller debts, manageable instalments | Larger or escalating debts, or where total cost compares well |
The ATO says the quickest way to set up a payment plan is through its online services, and that eligibility depends on circumstances. Its payment plan estimator can help you work out an affordable schedule.
Compare the two in dollars. Then add the harder-to-price factors: how stressful the debt is, whether it’s escalating, and how it affects your ability to get other credit.
How do you stop it happening next quarter?
A loan that clears one BAS but leaves the next one uncovered only moves the problem. Before borrowing, make sure there’s a plan:
- Set aside GST and PAYG in a separate account each week or pay run.
- Build a forecast that shows BAS due dates alongside everything else — see the 13-week cash flow forecast guide.
- Consider monthly reporting if quarterly lumps are too big; the ATO lets eligible businesses change to monthly GST reporting.
- Talk to your accountant about whether your PAYG instalments still reflect current income.
An illustrative example
Illustrative only. A growing electrical wholesaler has a record quarter. Sales are up, but so is stock, and the GST collected has largely been spent on inventory for the next quarter’s orders. The BAS due on 28 April is larger than the cash on hand.
The owner lodges on time. Then she compares an ATO payment plan with a short business loan. Because the debt is large and she’s keen to keep her ATO record clean while negotiating a bigger trade account with a supplier, a loan that clears the BAS in full suits her better. It’s repaid from the stock as it sells. She also opens a separate tax account and starts sweeping GST into it weekly.
What about income tax and PAYG instalments?
BAS isn’t the only tax bill that arrives in a lump. Company and individual income tax, and PAYG instalments based on last year’s income, can also land at awkward times — especially for businesses whose income has changed.
A business that had a strong year will usually face a larger tax bill and higher PAYG instalments for the following year. If trading has since slowed, those instalments can feel out of step with current cash flow. Your accountant can advise whether varying your instalments is appropriate for your situation.
The planning principle is the same as for BAS: know the dates, set money aside as you go, and put the obligations into your cash flow forecast so they don’t arrive as surprises. If a gap still appears, the options are similar — an ATO payment plan, a business loan, or a combination. What matters most is acting before the due date rather than after, while every option is still on the table.
Ready to take the tax pressure off?
A tax bill is one of the few deadlines you can see coming months ahead — and one of the easiest to get help with early. Send the 60-second enquiry and a real person will talk through whether a loan, a payment plan or a mix makes sense. There’s no credit check when you first enquire, and your details go to one specialist, not a parade of lenders. Be upfront about the amount owed and your lodgement status — honest answers get you a useful plan on the first call.
Frequently asked questions
Can I use a business loan to pay my BAS?
Yes. Paying tax obligations is a legitimate business purpose. The question is whether it's the best option compared with an ATO payment plan, which depends on cost, how large the debt is and whether it's escalated.
When is my BAS due?
The ATO says monthly BAS is due on the 21st of the month after the period ends. Quarterly BAS is due on 28 October, 28 February, 28 April and 28 July. Lodging online or through a registered agent may give extra time.
Should I lodge even if I can't pay?
Yes. The ATO says it's important to lodge on time so your information is up to date, and to contact it before the due date if you can't lodge or pay in full.
Is an ATO payment plan better than a loan?
Sometimes. A plan spreads the debt, but GIC continues to accrue and the plan has to be kept. A loan clears the ATO debt in one go and may suit if the total cost compares well or enforcement risk is rising. Compare both in dollars.