Catching up on overdue tax returns before you apply for finance

Why overdue returns stop finance

Lenders use tax returns to verify income. Without them, a bank can’t run its numbers, and the application stalls. Even alternative lenders, who can work without full returns, want to know what’s outstanding and why. Overdue lodgements also raise a question every lender asks: is there a tax debt that hasn’t been calculated yet?

Falling behind is common. Illness, a family crisis, a change of accountant, a hard trading year or simply being stretched too thin can all do it. The way forward is the same: get organised, get lodging, and keep lenders informed. If you’ve already been declined over this, our page on missing financials explains how lenders see it.

Step 1: confirm exactly what’s outstanding

Before you can catch up, you need a list. Log in to the ATO’s online services or ask a registered tax agent to check:

• which BAS periods haven’t been lodged,
• which income tax returns are outstanding, for the business and for you personally,
• any other lodgements, such as PAYG withholding summaries or taxable payments annual reports,
• your current account balance, including any estimates the ATO has raised.

Write it all down in one place.

Step 2: gather your records

Your accountant can’t lodge without records. Pull together:

• bank statements for every business account for each outstanding period,
• your bookkeeping file, if you use accounting software,
• sales invoices and supplier bills,
• payroll records and super payments,
• details of any assets bought or sold,
• loan statements.

If your bookkeeping is behind too, a bookkeeper may be faster and cheaper than having your accountant reconstruct everything.

Step 3: agree an order of work

Every situation differs, and your accountant should set the order. A common approach looks like this:

Priority	What	Why
1	Outstanding BAS, most recent first	Shows current turnover; often quicker
2	Most recent income tax return	What lenders look at first
3	Earlier income tax returns	Completes the record
4	Personal returns for owners	Lenders often check these too
5	Other lodgements	Completes compliance

Getting the most recent BAS and return lodged first gives lenders the most relevant information soonest.

Step 4: expect a tax debt, and plan for it

Catching up often reveals tax owing. That’s normal, and it’s far better to know the figure than to guess. Once the amount is clear, you have options:

• pay it from cash flow,
• set up a payment plan, which our guide to ATO payment plans before borrowing covers,
• clear it with finance, which our page on loans with ATO debt explains.

Talk to your accountant about any penalties and whether to request remission. Lodging voluntarily and engaging with the ATO generally helps.

Step 5: get a written timetable

If the catch-up will take weeks or months, ask your accountant for a short letter setting out:

• what’s been lodged,
• what’s still outstanding,
• when each item is expected to be lodged,
• your business structure and a confirmation of income, if they can provide one.

That letter is valuable. Low doc lenders often accept an accountant’s letter as part of their evidence, and it shows any lender you’re on top of the problem.

What lenders can accept while you catch up

You don’t necessarily have to wait until everything is lodged. Depending on your situation:

• Low doc lenders may accept BAS, bank statements and an accountant’s letter.
• Bank statement lenders may assess six to twelve months of business account history, typically for $5,000 to $500,000 unsecured.
• Property-secured lenders may lend from $20,000 to $5,000,000 with lighter documentation, focusing on equity and exit.

Each will still want to know what’s outstanding and your plan. The timetable letter helps here.

If you need funding while the catch-up is under way, send us a short enquiry.

Staying current once you’ve caught up

The catch-up is hard work. Don’t let it slip again:

• Book BAS preparation into your calendar each quarter.
• Keep bookkeeping up to date monthly, not yearly.
• Set aside a fixed share of income for tax in a separate account.
• Ask your accountant about lodgement programs that give tax agents extended due dates.

Once you have a clean, current record, a refinance to cheaper, longer-term finance becomes much more achievable.

Mistakes to avoid

• Lodging estimates just to tick the box, then amending later. Lenders and the ATO prefer accurate lodgements.
• Ignoring personal returns while focusing on the business.
• Taking on high-cost debt to cover the catch-up without a plan for the tax that emerges.
• Not telling a lender returns are behind; they’ll find out.

Illustrative example: A café owner was three BAS periods and two income tax returns behind after her business partner left. Her bank declined a refurbishment loan. Her new accountant lodged the BAS within three weeks and the most recent return within six, and wrote a timetable letter for the older return. A low doc lender approved a smaller facility while the final return was completed, and she planned to approach her bank again once everything was lodged.

Working well with your accountant

A catch-up goes faster when you and your accountant are organised together. A few practical tips:

• Agree a list and a timetable at the first meeting, with dates for each lodgement.
• Deliver records in the format they ask for. Bank statements as PDFs, an export from your accounting software, scanned receipts in a single folder.
• Answer questions quickly. Delays on your side slow everything.
• Ask for a fee estimate up front, and whether staged payment is possible.
• Ask about lodgement program dates once you’re current, so future due dates are manageable.

If your relationship with a previous accountant ended badly, a new accountant may need to request records from them. Allow time for that, and give your new accountant written authority to ask.

What a catch-up timeline can look like

Week	Typical focus (illustrative)
1	List outstanding lodgements; gather bank statements and records
2–3	Bookkeeping brought up to date; BAS prepared
3–4	Outstanding BAS lodged; tax debt confirmed
4–6	Most recent income tax return prepared and lodged
6–10	Earlier returns completed; payment plan finalised if needed

Every catch-up is different, and some take longer. Use the timeline as a conversation starter with your accountant rather than a promise.

Telling lenders where you’re up to

If you approach a lender midway through, give them a simple status table: each period, lodged or not, and the expected lodgement date. Update it as you go. Lenders are much more comfortable with a business that’s visibly catching up than with one that’s silent about it.

When personal returns are behind too

Owners who fall behind on business lodgements are often behind on their personal returns as well, particularly sole traders and directors who draw income from a company or trust. Lenders frequently ask for personal returns, especially for guarantors, so include them in your catch-up list. Your accountant can often prepare business and personal returns together, which can save time and fees.

Catching up, and still need funding?

You don’t have to wait until the last return is lodged to talk to us. Our enquiry takes about a minute, there’s no credit check at that first stage, and your details won’t be spread around a list of lenders. A real person reads your situation and calls you. Please tell us which years and periods are outstanding, so we can match you with a lender comfortable with where you’re at. Start your enquiry.