The tax set-aside account: stop BAS day becoming a loan day

A lot of the business loans we see for tax debt start the same way. The business had a great quarter, the money flowed in, and it flowed out again on stock, wages and a new piece of equipment. Then BAS day arrived, and the GST that was always the ATO’s money had already been spent.

The fix is boringly simple and wildly effective: a separate account for tax, topped up every week.

Why does tax money go missing?

Because it lives in the same account as everything else. When GST, PAYG withholding and super sit in your trading account, they look like your money. They aren’t. You’re holding them for the ATO and your employees’ super funds.

Three things have raised the stakes recently:

• Payday Super. The ATO says that from 1 July 2026, employers must pay super so it reaches employees’ funds within 7 business days of payday. The Fair Work Ombudsman describes it as paying super at the same time as wages. Super is now a pay-run cost.
• The super guarantee rate. It’s been 12% since 1 July 2025.
• Interest isn’t deductible. The ATO confirms general interest charge and shortfall interest charge incurred from 1 July 2025 can’t be claimed as a tax deduction, so a lingering tax debt costs more than it used to.

How does a tax set-aside account work?

1. Open a second business account. Ideally without a debit card attached.
2. Each week, transfer the tax portion of that week’s takings and wages.
3. Pay the ATO and super funds from it, never from the trading account.
4. Check it against your BAS each quarter and adjust the percentages.

What goes in each week?

Bucket	How to estimate it
GST	The GST you charged on sales, less GST on business purchases if you want precision
PAYG withholding	The tax you withheld from staff wages this week
Super	The super owed for this week’s pay run, paid on payday
Income tax / PAYG instalments	A percentage of profit your accountant suggests

If you’re not sure on percentages, start simple: put aside all GST collected plus all PAYG withheld plus all super, then add a flat percentage of takings for income tax, and refine it with your accountant.

Already have a tax debt? You can fix the habit and the debt at the same time. Tell us about it in 60 seconds, with no credit check to enquire.

Worked example (illustrative)

A made-up café takes $18,000 a week including GST and runs a weekly wage bill of $6,500 gross for staff, with $900 withheld in PAYG.

Weekly transfer	Amount
GST in takings (one-eleventh of GST-inclusive sales)	about $1,636
PAYG withheld	$900
Super at 12% of ordinary-time wages (assume all ordinary time)	$780
Income tax estimate (illustrative 4% of takings)	$720
Total moved to the tax account	about $4,036

Super goes straight out on payday under Payday Super. The rest builds up for BAS. Over a 13-week quarter, the GST and PAYG portion alone is about $33,000. That’s the money that, without a separate account, tends to vanish into stock and repairs.

Note: GST credits on purchases will reduce what you actually owe on BAS, so the account usually builds a small surplus. Treat that as a buffer, not spending money.

Know your dates

The ATO’s quarterly BAS dates are:

Quarter	Due
July to September	28 October
October to December	28 February
January to March	28 April
April to June	28 July

Monthly BAS is due on the 21st of the following month. The ATO says lodging online, yourself or through a registered agent, can give an extra two weeks for quarterly BAS (except the December quarter, which already has extra time).

What if you’re already behind?

1. Lodge anyway. The ATO’s advice is to contact it before the due date if you can’t lodge or pay.
2. Set up a plan. The ATO says businesses owing $200,000 or less may be able to set up a payment plan online.
3. Start the set-aside habit now, so new liabilities are covered while the old one is paid down.
4. Consider a loan if it fits. Clearing tax debt with a business loan can make sense when the debt is larger, enforcement has started, or the plan repayments don’t fit. See tax debt business loans.

Engagement matters: the ATO says it can report business tax debts over $100,000, overdue more than 90 days, to credit reporting bureaus when a business isn’t engaging with it.

How lenders see a tax account

Lenders love seeing regular transfers to a tax account in your statements. It shows discipline and makes it less likely that a loan will be followed by a tax debt. It’s one of the simplest ways to look more loan-ready. Check yourself with the Am I loan-ready? quiz.

The habit in one line

Every week, move the ATO’s money and your staff’s super out of sight before you spend a cent of the rest.

Myth or reality: tax set-asides

“I’ll just keep a buffer in my main account.” It rarely survives a busy month. Physically moving the money out is what makes it work.

“My accountant handles tax, so I don’t need this.” Your accountant prepares and lodges. The cash still has to be there when the bill arrives.

“Setting money aside will starve the business.” It feels that way at first. But the money was never yours to spend, and having it ready removes the quarterly panic.

“Super can wait until the end of the quarter.” Not any more. Under Payday Super, the ATO says contributions must reach employees’ funds within 7 business days after payday.

Setting it up in under an hour

1. Open the account. Most business banks let you add a second account online.
2. Name it clearly, such as “ATO and super only”.
3. Pick a transfer day, ideally the day after your biggest weekly deposits land.
4. Set the percentages with your accountant: GST, PAYG withheld, super and income tax.
5. Automate it where your bank allows, or set a weekly reminder.
6. Review each quarter when you lodge BAS, and adjust if you’re over or under.

What to do with a surplus

If the account builds more than you need, don’t rush to spend it. Leave a buffer for the next quarter, then consider moving some to a separate emergency fund. Businesses with a few weeks of costs in reserve borrow from strength rather than from need, and that usually means better options when they do borrow.

How the account helps when you do borrow

When you apply for a business loan, regular transfers to a tax account show up clearly in your bank statements. They tell a lender that GST, PAYG and super are under control, which removes one of the most common worries in any assessment. They also mean that a growth loan is far less likely to be followed by a tax debt a few months later. In short, the tax account is one of the cheapest ways to look more loan-ready.

Sole traders and the set-aside habit

Sole traders don’t withhold PAYG from their own drawings, but they still face GST on BAS and income tax on profit, often through PAYG instalments. The same weekly habit works: move GST and an income tax estimate out of the trading account, and let it build for BAS day and tax time.

If the ATO balance has already built up, read what lenders want to see and how business loan fees stack up before you decide anything.

Borrow for growth, not for tax

The best use of a business loan is to build something. A tax set-aside account keeps your borrowing pointed at growth instead of catch-up. If you’re already in catch-up mode, that’s fixable too.

Start step 1 when you’re ready. It’s a 60-second enquiry with no credit check, your details aren’t spread around a raft of lenders, and a real expert calls you to talk through the options. Please be upfront on the form about any ATO balance and arrangement. Accurate details mean a better match and a faster path to clear air.