Scenario – refinancing to clear tax debts

In May 2016 we were referred a client who needed to clear $142,000 of accrued ATO debt. The client had strong turnover and a solid business, however, unforeseen operational challenges had a short-term, but sharp, impact on cash flow and resulted in a spiralling tax debt. Adding to their cash flow pressures was a general interest charge of $1,037 per month.

Fortunately, the client had some equity in their home which could be accessed. By tapping into the accrued value of the client’s home we managed to refinance this tax debt with a separate loan split on top of their existing home mortgage.

The interest payment on this loan split was $525 per month which saved them $6,139 p/a. This enabled the client to improve their cash flow and clear the $142,000 loan in full. The business is now back on track and firing on all cylinders.

This is a surprisingly common scenario and we have helped numerous clients overcome a short-term tax debt with similar strategies to ensure they can quickly return to growing their business.

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