Why ATO repayment plans are now less attractive and how alternative finance can help.

From 1 July 2025, a significant change to Australia’s tax system began reshaping how medical professionals manage their tax obligations. The Australian Tax Office (ATO) no longer allows deductions for interest charged on overdue tax debts. For health practitioners looking to repay their tax liabilities over time, this means higher interest costs, reduced financial flexibility and tighter cashflow.

What’s changed

Until recently, when the ATO charged interest on overdue amounts — through the General Interest Charge (GIC) or Shortfall Interest Charge (SIC) — that interest could usually be claimed as a tax deduction, which helped soften the real cost of carrying tax debt. 

This cost saving has now disappeared, with interest on ATO tax debt no longer deductible, meaning the full interest cost must be paid without any offset, significantly increasing the after-tax burden.

Why this matters for medical professionals

Medical professionals face unique financial pressures. Those running a practice often manage significant overheads — from staffing and rent to equipment and insurance. For employed practitioners, remuneration structures, meeting ongoing tax obligations and personal commitments can also create cash flow challenges. In both cases, paying off tax debt from prior years can quickly add to the strain.

There are also broader consequences. For example, most major banks will not consider lending to clients with unpaid tax liabilities. This means carrying ATO debt can prevent you from accessing loans for property, practice expansion or investment opportunities. In other words, leaving debt with the ATO doesn’t just cost more — it can also derail your financial ambitions. 

The limitations of ATO repayment plans

The ATO still offers repayment arrangements, but under the new rules, they are far less attractive than they once were. Without interest deductibility, the real cost of these plans has increased. They are also relatively rigid — often requiring more aggressive paydown arrangements (usually 2 years), which may not align with the realities of medical practitioners’ cashflows.

For many, what once seemed like a favourable arrangement can now create unnecessary financial pressures and limit future borrowing capacity.

A smarter alternative with Medpro Finance

This is where Medpro Finance comes in. Medpro specialises in working with medical professionals and their advisers to deliver tailored finance solutions. These solutions are typically tax deductible* (depending on your circumstances) which can substantially reduce the after-tax cost of managing ATO debt.

With Medpro Finance, you can benefit from:

• Tax-deductible interest payments*
• Longer repayment terms that suit your cash flow
• Fast approvals with a straightforward process
• Tailored lending solutions that banks typically won’t provide

By clearing tax debt through Medpro Finance, you not only reduce pressure on day-to-day finances, but also improve your ability to borrow for other purposes.

Why advisers and accountants should take note

For accountants, brokers and advisers, this change represents both a challenge and an opportunity. Clients who once relied on ATO plans now face higher costs — and may be looking for better options. Being able to connect them with alternative finance demonstrates foresight and strengthens client relationships.

Take back control

The July 2025 changes mark an important shift: leaving tax debt with the ATO now carries a higher financial and strategic cost. For medical professionals, it’s time to rethink how tax obligations are managed.

Medpro Finance offers a smarter, more flexible alternative — one that can reduce after – tax costs, protect borrowing power and relieve cash flow pressure.

Speak to a Medpro Finance specialist today.

*Subject to your circumstances. Please seek independent tax advice.