Running a business in Melbourne means wearing a lot of hats. But one question that often gets pushed to the back of the queue — especially when things are busy — is whether the business is genuinely viable for the long term. The ATO has a free tool to help you answer that question, and knowing how to use it could make a significant difference for your business.
What Does ‘Business Viability’ Actually Mean?
The ATO defines a viable business as one that either generates enough profit to reward the owner and meet creditor obligations, or holds sufficient cash reserves to sustain itself through periods of lower performance. In simple terms: can your business pay its bills, now and into the future?
It sounds straightforward, but viability is more nuanced than just checking your bank balance. It encompasses gross margin, cash flow, working capital, liquidity, and your debtor and creditor positions — all of which interact to paint a complete picture of financial health.
What the ATO’s Business Viability Assessment Tool Does
The ATO’s Business Viability Assessment Tool is a free, confidential online tool that analyses a range of financial metrics to give you an overview of where your business stands. Importantly, the ATO does not record or store any information you enter — it is purely for your own use.
To get meaningful results, you will need the following on hand for the current year-to-date and the two preceding financial years:
- Profit and loss statement (statement of financial performance)
- Balance sheet (statement of financial position)
- Aged creditor and debtor listings
- Total monthly repayment amounts across all debt facilities — loans, overdrafts, hire purchase and lease agreements
Once you complete the assessment, the tool generates a report using tick and cross indicators. A result with mainly ticks suggests the business is trading viably. Crosses indicate financial performance and position may be at risk and warrant immediate attention.
When the ATO Runs Its Own Viability Assessment on You
The ATO does not just offer this tool for voluntary use. In certain circumstances — such as when a business has defaulted on a payment plan, failed to meet lodgment deadlines, or is negotiating a debt arrangement — the ATO will conduct its own formal viability assessment. In those cases, extensive supporting documentation is required within agreed timeframes, including:
- Projected cash flow statements for the term of the payment plan
- Bank statements for all accounts
- Profit and loss statements and balance sheets for three periods
- A formal proposal to clear all outstanding tax obligations in the shortest possible timeframe
This is not a situation you want to navigate without professional support.
Why Early Action Matters
The ATO’s own guidance makes the point clearly: seeking professional advice at the earliest opportunity is critical to addressing financial issues before they escalate or become unmanageable. By the time the ATO is assessing your viability on their terms, your options have already narrowed.
Using the tool proactively — before there is a crisis — gives you and your adviser time to make strategic decisions around restructuring, cash flow management, negotiating payment terms with creditors, or planning for a responsible wind-down if that is the right course of action.
How Pace Advisory Group Can Help
At Pace Advisory Group, we work with business owners across Melbourne to make sense of what the numbers are really telling them. Whether you have completed the ATO’s viability tool and want to understand your results, or you are facing a debt negotiation with the ATO and need experienced advisers in your corner, we are here to help.
Our advisory team understands the full picture — tax obligations, commercial realities, and the practical steps needed to stabilise and strengthen your business position. We work with clients across construction, e-commerce, franchises, and healthcare.
Book a Consultation — paceadvisory.com.au
