Your accountant projects a big tax bill — planning the funding before it lands

A good year often comes with a sting in the tail. Your accountant runs a tax projection, and the figure at the bottom is far larger than what’s sitting in the bank. The upside is that a projection gives you warning. Owners who use that warning have choices; owners who wait until the due date mostly have pressure. This page is about using the lead time well.

Why tax projections surprise so many owners

The most common reasons a projected bill jumps are:

• Profit grew faster than instalments. PAYG instalments are generally based on earlier figures, so a strong year leaves a balance to pay when the return is assessed.
• Cash went into growth. Profit was reinvested in stock, equipment or wages, so it’s on the books but not in the bank.
• A one-off event. Selling an asset, a large contract or a capital gain.
• Instalments were varied down in a tight year and never brought back up.

Ask your accountant which applies. It shapes whether this is a one-off or something you’ll face again next year.

Step one: confirm the facts

Before deciding anything, get clear answers to these from your accountant:

1. What’s the projected amount, and how firm is it?
2. When is it due — and is it income tax, or BAS-related, or both?
3. Will next year’s PAYG instalments rise as a result?
4. Are there legitimate ways to reduce it before year end, such as timing of deductible spending?

Quarterly BAS is due 28 October, 28 February, 28 April and 28 July, with extra time available for some quarters when lodging online or through an agent. Income tax due dates depend on your lodgement arrangements with your tax agent, so confirm the exact date with them.

Step two: compare the three main options

Option	How it works	Watch out for
Set-aside plan	Move a fixed amount each week into a separate tax account until the due date	Needs enough weeks left and enough spare cash
ATO payment plan	Pay the bill in instalments after it falls due; online for debts of $200,000 or less	Interest accrues and isn’t deductible from 1 July 2025
Short-term finance	Borrow to pay the ATO on time, repay the lender over an agreed term	Loan costs; must fit your cash flow

Many owners use a mix: set aside what they can, then cover the balance with a payment plan or a modest facility. Ask your accountant to put real numbers against each approach over the same period, so you’re comparing like with like.

Why paying on time has become more valuable

ATO general interest charge incurred from 1 July 2025 can no longer be claimed as a tax deduction. And business tax debts above certain thresholds can be reported to credit bureaus where the business isn’t engaging with the ATO. Neither is a reason to panic, but both strengthen the case for having a plan before the due date. Our page on weighing a payment plan against a loan covers this in more depth.

What a lender looks at for a planned tax payment

Lenders view a planned tax payment quite differently from an overdue one. A tidy file usually includes:

• The tax projection or notice of assessment showing the amount
• Recent tax returns and financial statements (how lenders use them)
• An ATO account statement showing the current position
• Bank statements showing trading conduct
• A note from you or your accountant on why the bill is large this year

If the business is profitable and the issue is timing, this is often a straightforward conversation.

An illustrative timeline

Here’s how a hypothetical electrical contractor might use eight weeks of warning:

• Week 1: Accountant confirms the projected bill and due date. Owner opens a separate tax account.
• Week 2: Bookkeeper builds a cash forecast to see how much can be set aside weekly without squeezing wages.
• Week 3: Owner and accountant compare a payment plan with a short facility for the expected shortfall.
• Week 4: Owner enquires with a lender, sharing the projection and recent financials.
• Weeks 5–7: Documents provided, facility approved for the shortfall only.
• Week 8: Bill paid on time from savings plus the facility. Instalments for next year are reviewed.

The details are illustrative, but the principle holds: early action turns a stressful deadline into an ordinary piece of planning.

Mistakes to avoid when a big bill is coming

• Spending the “tax money” on growth and hoping. It’s tempting when the bank balance looks healthy, but that balance already belongs partly to the ATO.
• Ignoring the next instalment. A large assessment often means higher PAYG instalments next year. Budget for both.
• Borrowing more than the gap. Cover the shortfall, not the whole bill if savings can handle part of it.
• Leaving it to the week before. Lenders need time to assess, and so does the ATO if you want a plan.

Building the habit for next year

Once this year’s bill is sorted, ask your accountant to set up a simple rhythm: a quarterly projection at each BAS meeting, a dedicated tax account, and instalments that reflect current profit. Our guide to turning the quarterly BAS meeting into a funding check shows how.

Plan the payment while you still have time

If your accountant’s projection has shown a bill you can’t comfortably cover, now is the best time to look at options. Make a 60-second enquiry to see what’s possible. There’s no credit check at that point, your file is matched with one lender suited to it rather than spread around, and a real person calls you to talk it through. Share the projected amount and due date accurately so we can link you to the right option first time. Get ahead of the tax bill.