The Federal Government has amended the Income Tax Assessment Act 1997 which previously allowed taxpayers to claim tax deductions from ATO interest charges, specifically from General Interest Charges (GIC) and Shortfall Interest Charges (SIC).
These charges were previously what was called ‘ATO Interest Deductions’. However, this deduction will soon end.
The Federal Government is proposing this tax change because of a concern that it is too forgiving, for ATO interest charges to act as a deterrent for those who do not pay their taxes on time.
When you don’t pay your tax on time — or if the ATO later finds you should’ve paid more — they’ll start charging interest on the amount you owe. This can happen for a few reasons, like missing a payment deadline, lodging an incorrect return, or having your return adjusted after it's been lodged.
The interest is meant to cover the time the money wasn’t paid, and it compounds daily based on a yearly rate.
The ATO may apply GIC if tax or some other liability is paid late. GIC is incurred daily.
If you voluntarily or are forced to amend a tax return, and the changes mean your tax owed increases, the ATO may apply a SIC. An interest payment on the tax shortfall.
For individuals, you will also see this interest charged pre-filled on your tax return. Businesses can see this charge in their ATO Account Summary.
ATO interest rate charges are reviewed and changed quarterly.
Quarter | GIC annual rate | GIC daily rate |
|---|---|---|
April – June 2025 | 11.17% | 0.03060274% |
January – March 2025 | 11.42% | 0.03128767% |
October – December 2024 | 11.38% | 0.03109290% |
July – September 2024 | 11.36% | 0.03103825% |
Current GIC rates from ATO - General Interest Charge rates as of 13 March 2025.
Section 8AAD of the Taxation Administration Act 1953 specifies how GIC is calculated.
Quarter | SIC annual rate | SIC daily rate |
|---|---|---|
April – June 2025 | 7.17% | 0.01964383% |
January – March 2025 | 7.42% | 0.02032877% |
October – December 2024 | 7.38% | 0.02016393% |
July – September 2024 | 7.36% | 0.02010929% |
Current SIC rates from ATO - Shortfall Interest Charge rates as of 13 March 2025.
Due date for shortfall interest charges: 21 days after the day the ATO issues the notice of amended assessment.
You can negotiate with the ATO for a full or partial remission in the case you have incurred GIC or SIC charges. However, whether or not it is approved is at the ATO’s discretion.
In the case of GIC charges, the ATO will consider the circumstances that may have caused delayed payments, how these circumstances prevented you from paying on the correct date, and what steps you had taken to reduce the delay. They may ask for documentation to support the request.
If you claim the deduction and the ATO remits the GIC or SIC, you will need to include the amount as income in your return in the financial year the remission is granted. (Likely the next financial year, 2025-26).
ATO interest charges like GIC and SIC can add up fast. The good news? Most of them are avoidable if you stay on top of a few key things:
Pay your tax bills by the due date. This includes income tax, BAS, super, and PAYG instalments. Late payments are the main trigger for GIC.
Mistakes in your tax return—like missing income or claiming too much—can lead to extra tax and SIC interest. Double-check before you lodge or get help from a tax agent.
Can’t pay right now? Still lodge your return on time. The ATO is more flexible when you’ve at least submitted on time. Payment plans are also available through the ATO to make tax payments more manageable (please note, tax debts on payment plans accrue general interest charges; so you will still want to pay off your tax as soon as possible).
Check your myGov or business portal regularly. You’ll see any unpaid amounts, interest charges, or notices early.
If you get a late payment or amended return notice, take action straight away. Pay what you can or speak to the ATO about a payment plan.
If you’re going through tough times—like illness, disaster, or cash flow issues—contact the ATO. The ATO may reduce or cancel interest charges through a process called remission, especially if your situation is serious and supported by evidence. Always engage as early as possible.
As any interest charges incurred on or after July 1, 2025 will no longer be deductible, this tax time will be your last to deduct these charges if these have been applied to you.
You won’t be able to claim SIC and GIC deductibles for any future tax return.
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As of April - June 2025, the GIC annual rate is 11.17% and the GIC daily rate is 0.03060274%.
This daily rate on a $1,000 tax debt would mean about 30 cents per day would be added in interest.
Yes, but that will change after the 2024-2025 tax return. Any ATO interest rate charges incurred from July 1 2025 or afterwards will stop being deductible.
