Navigating the ATO financial hardship policies is complex. Therefore, to gain hardship approval you will need sufficient supporting evidence for ATO approved. Furthermore, successful tax debt hardship applications can take anywhere from 14-60 days to be approved. Hence, a faster solution such as caveat loans may be required to prevent legal action. Based on that information, speed is a critical factor; if you have time before legal proceedings then applying for hardship is a preferable option. However, if there is little or no time, or have received a legal letter; finance to pay the tax debt may be a more suitable solution.
Australian Tax Office Website: Policy guidelines for ATO Tax Debt Hardship