Olga Koski, CEO of Tax Assure, keeps a toy frog on her desk. It's a nod to the old productivity idea of ‘eating the frog’ – do the task you least want to do first before anything else, rather than let it sit on your to-do list, getting more daunting by the day.

For Olga, this serves as a working metaphor for tax avoidance, which she sees as the single biggest problem in businesses carrying ATO debt.

"You've got to do the thing you don't want to do; you've got to deal with your tax," emphasises Olga as part of the Banjo webinar, Realities, Resilience and Running a Business: Navigating tax, funding and growth. "I think the biggest thing is you need to face it head on. Don't run away from the deal. Don't run away from the tax."

For brokers, that avoidance is the real enemy more than the debt itself, and more than the ATO. A client who ignores a $50,000 tax debt for six months has fewer options than one who calls on day one. Understanding why, and how to get clients past the fear, is fast becoming a core broker skill rather than a nice-to-have.

For years, tax debt was treated by many brokers as an automatic disqualifier. If a client has ATO debt, straight away it's a dead deal, ‘we can't help’ – that was the mindset, according to Olga. But that thinking is now out of date.

There is currently more than $50 billion in outstanding business tax debt in Australia, and lenders have now shifted their posture accordingly. What used to be treated as a red flag is increasingly treated as an opportunity, provided the debt is understood and structured properly.

Part of that shift comes down to interest. ATO general interest charge currently compounds daily at around 11 per cent and, crucially, is no longer tax deductible. By contrast, a commercial loan used to clear or refinance that debt is generally not compounded daily and the interest may be deductible. For a viable business, borrowing to deal with tax debt is often the cheaper and cleaner option, rather than a last resort.

The single biggest mistake business owners make is doing nothing. Not making a decision is making a bad decision.

In the webinar, Innis Cull, Principal at BRI Ferrier, puts it simply: “It always comes down to the story. It comes down to why.” The ATO now looks closely at a taxpayer’s compliance history, such as how many payment arrangements they’ve entered, how many have defaulted, whether lodgements and payments have been on time.

A business that acts early builds a track record of good faith. A business that lets the debt sit, then scrambles once enforcement starts, walks into negotiations with a much weaker hand and a much shorter runway.

That runway has been shrinking. “We’re seeing a very, very short time frame – less than six months between a director penalty notice being issued and the ATO suing,” says Olga. Parallel action is also increasingly common, with the ATO sometimes pursuing the company and the director personally at the same time. Garnishee notices, which allow the ATO to take funds directly from a bank account, are also being issued faster than in the past, and increasingly through automated processes rather than a phone call.

None of this means the situation is hopeless. It means the window to negotiate from strength is narrower than most business owners assume, and brokers who understand the timeline can help clients act while they still have leverage.

Both panellists were clear: payment plans are still very achievable, but there's a wide gap between a payment plan that gets approved and one that actually helps the business. As Olga puts it, anyone can get a payment plan; the harder task is getting one with the right length, the right flexibility and cash flow that actually matches the season-to-season reality of the business.

There's also a lesser-known upside for clients who act early. Getting into a compliant payment arrangement is often the only way to claw back some of the interest charged on the debt through a remission application.

For brokers, this doesn't mean becoming a tax specialist, but it does mean recognising the moment to bring one in.

Olga’s advice to brokers is that you don't need to know the answer; you just need to know who does. Whether a client needs a payment plan, a restructure or a lending solution, the value a broker adds is knowing which specialist solves which problem, much the same way a GP refers a patient to a specialist.

Just as importantly, brokers can help remove the potential embarrassment that keeps business owners silent. A broker who can plainly say that this is a normal and solvable problem, not a crisis unique to them, is often the one that gets a client to finally pick up the phone.