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The Australian Taxation Office (ATO) has recently published an article advising that taxpayers can no longer claim an income tax deduction for ATO interest charges incurred on or after 1 July 2025.
This change in law relates to General Interest Charges (GIC) and Shortfall Interest Charges (SIC), and has been legislated to address the Government’s increasing unpaid tax debt.
GIC applies to unpaid tax liabilities and is worked out daily on a compounding basis. Therefore, any GIC incurred on or after 1 July 2025 is no longer deductible.
SIC applies when your tax return is amended and your tax liability increases. Any SIC imposed on a notice of amended assessment on or after 1 July 2025 is no longer deductible.
Any GIC or SIC already incurred prior to 1 July 2025 remains deductible for the 2024-25 and earlier income years. Conversely, any interest remitted will need to be included as assessable income in the year where the remission occurs.
Further details on the changes can be found on the ATO’s website. If you would like more information regarding these changes and options available to you, please contact our office.