The Honeymoon’s Over: ATO Says No to GIC Remission
What has changed?
From 1 July 2025, the ATO has introduced key changes to General Interest Charges (GIC) and Shortfall Interest Charges (SIC). These changes impact both the ability to deduct interest and the process for seeking remission.
Remission of GIC/SIC
Remission is still possible, but the ATO has tightened its criteria. Requests must be formally submitted with strong supporting documentation.
The ATO will assess:-
- Whether the delay was outside the taxpayer’s control
- Steps taken to mitigate the delay
- History of compliance
Note: Remission decisions are not subject to objection rights but may be reviewed under the Administrative Decisions (Judicial Review) Act 1977.
Deductibility Changes
- Under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025:
GIC/SIC incurred on or after 1 July 2025 are no longer deductible - Remitted interest will not be included in assessable income
- For prior income years, GIC/SIC remains deductible and remissions are assessable
Financial Impact
With GIC currently at 11.17%, compounding daily, the cost of carrying tax debt is significant. Example: A $100,000 overdue tax debt could incur over $11,000 in annual interest- none of which is deductible after 1 July 2025.
Practical Advice for Businesses and Taxpayers
- Regularly review tax debt positions and pay early to avoid interest charges.
- Document any cases of financial hardship thoroughly to support remission requests if needed.
- Plan cash flow proactively to ensure tax obligations are met on time.
At Economos, we recommend taking a proactive stance on tax debts to help minimise costly interest charges and navigate the new remission process effectively. Feel free to get in touch with one of our tax agents today if you’re concerned about any of these changes and how they may impact you.