LMG brokers see 486% jump in tax debt funding applications
Mortgage brokers across the LMG network have reported a significant rise in business finance inquiries as small business owners respond to upcoming changes to tax rules affecting Australian Taxation Office (ATO) debt.
From July 1, general interest charges (GIC) and shortfall interest charges (SIC) on tax debt will no longer be tax-deductible. With the GIC rate currently at 11.17% and compounding daily, many small and medium-sized businesses are exploring funding options to restructure or refinance before the change takes effect.
LMG stated that business finance inquiries linked to tax debt have risen by 486% in financial year 2025 compared to the same period last year.
Andrew Vitucci (pictured second from right), finance broker at My Lending Specialist, said the looming changes have led to a shift in behaviour among clients.
“ATO debt has always been a challenge for small business owners, but the ability to claim interest as a deduction softened the blow and that safety net is now gone,” Vitucci said. “We’ve seen a significant increase in funding inquiries directly tied to ATO debt over the past eight weeks.
“Clients are now treating this as a priority. They’re wanting to consolidate or refinance before this becomes a much more expensive liability.”
Savvi Lending managing director Elisha Zejfert (pictured far right) said the rule change has prompted more business owners to take action.
“There’s definitely a sense of urgency in the market right now,” she said. “Business owners are realising that doing nothing is no longer an option, particularly those already under cash flow pressure. I expect inquiries will continue into the new financial year as more SMEs become aware of the long-term cost implications of holding onto tax debt.”
Lenders are also reporting a rise in applications related to ATO debt. According to Lumi chief executive and founder Yanir Yakutiel (pictured second from left), brokers are playing a key role in raising awareness.
“Many SMEs aren’t fully aware of how much this change could cost them in the long run,” Yakutiel said. “We’ve worked closely with brokers to help them understand the funding options available, and we’re seeing an increase in volume of applications coming through as a result.
“For some clients, refinancing ATO debt could now mean the difference between staying ahead or falling further behind.”
Tim Wells (pictured far left), head of operations for asset finance at LMG, commented that the broker channel is critical in helping businesses adapt to changing cost pressures.
“Our brokers are often the first call when business owners are under pressure,” he said. “The proactive engagement we’ve seen over the past couple of months reflects just how vital finance brokers are in helping clients understand and manage the cost implications of these types of regulatory changes.
“This is a strong example of the industry working together – brokers, lenders and aggregators – to ensure small businesses have access to timely advice and tailored finance solutions.”
With the deadline approaching, brokers are encouraging small business owners to speak to finance professionals and consider options before the new rules apply.
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