Your ATO Interest Deductions (GICs & SICs) Stop July 1, 2025

2024–25 Is the Final Year to Deduct GIC & SIC Interest Charges

RELEVANCE: INDIVIDUALS & BUSINESSES

After the 2024–25 tax time, you’ll no longer be able to claim tax deductions for ATO interest charges—specifically General Interest Charges (GIC) and Shortfall Interest Charges (SIC)—on your tax return.

If you currently owe these charges, or incur them during the 2024–25 financial year, this guide is for you. Let’s break down what these charges mean, how they're calculated, and how to stay ahead before the deduction window closes.

What You Need to Know About the Cutoff Date

What the ATO announced specifically is that any interest (SIC or GIC) incurred on or after 1 July 2025 will no longer be claimable as a deduction. It’s the date the interest charge is incurred (not when it’s paid) that determines deductibility.

This change was announced in the 2023–24 Mid-Year Economic and Fiscal Outlook (MYEFO) and is now law. While the government has not formally stated a motive in the legislation, prior commentary suggests the intent is to encourage on-time tax compliance by removing the deductibility of ATO-imposed interest.

Note: The change applies to assessments for income years starting on or after 1 July 2025. For most taxpayers, this means the 2025–26 financial year onward.

If your business uses a Substituted Accounting Period (SAP), the changes apply from your first accounting period starting after 1 July 2025.

In Further Detail

What Are GIC & SIC Interest Deductions?

Previously, the Income Tax Assessment Act 1997 allowed taxpayers to claim a deduction for certain ATO interest charges. These included:

• General Interest Charges (GIC): For late payments
  
  
• Shortfall Interest Charges (SIC): For underpaid tax identified after lodgement
  
  

These were collectively known as ATO interest deductions. But starting July 1, 2025, these deductions will be removed under a Federal Government amendment. 

What Are ATO Interest Charges?

If you pay your tax late—or if the ATO later adjusts your return and finds you owe more—you’ll be charged interest. These charges are designed to cover the time value of money and act as a deterrent for delays or errors.

They accrue daily and compound, based on a quarterly interest rate.

General Interest Charges (GIC)

GIC is applied daily when tax or other liabilities are paid after the due date.

Shortfall Interest Charges (SIC)

SIC is applied when a tax shortfall arises—usually from an amended return, either voluntarily submitted or initiated by the ATO.

How are ATO Interest Rate Charges Calculated?

ATO interest rate charges are reviewed and changed quarterly.

GIC – General Interest Charge Rates

Source:  ATO - GIC rates,  March 13 2025

A $1,000 debt could accrue ~$0.30 per day in GIC interest at current rates.

SIC – Shortfall Interest Charge Rates

Source: ATO - SIC rates,  March 13 2025

SIC due date:  21 days after the day the ATO issues the amended assessment. 

Where Can You See These Charges?

GIC appears on:

• ATO late payment notices
  
  
• GIC notices
  
  
• Your account summary in ATO online services (via myGov or Business Portal)
  
  
• Pre-filled tax return data (for individuals)
  
  

SIC appears on:

• Your amended return, alongside your adjusted tax payable

Can You Request a Remission?

Yes, under certain conditions.

If you’ve incurred GIC or SIC but were under extenuating circumstances—such as illness, natural disaster, or severe cash flow disruption—you can apply for a full or partial remission.

What the ATO Considers:

• What caused the delay or error?
  
  
• Could it have been avoided?
  
  
• What steps did you take to minimise it?
  
  
• Are you providing evidence (e.g. medical letters, business records)?
  
  

It's important to understand that even after a comprehensive application, approval is still dependent on the ATO and you may not be granted a remission.

However, if the ATO grants a remission after you’ve claimed the deduction, the remitted amount becomes taxable income in the year it’s reversed—likely in 2025–26.

Smart Ways to Avoid GIC and SIC Charges

ATO interest charges like General Interest Charges (GIC) and Shortfall Interest Charges (SIC) can quietly pile up—especially now that they'll no longer be tax-deductible from 1 July 2025. The good news? With a few proactive steps, many of these costs can still be avoided.

Here’s how:

1. Keep an Eye on Your ATO Account

Regularly check your myGov or ATO Business Portal for upcoming due dates, payment reminders, and amended assessments. Spotting issues early gives you the most flexibility to resolve them—before interest starts accruing.

2. Read ATO Notices—and Act Fast

ATO correspondence isn’t just informational—it’s a ticking clock. If you receive a late payment notice or an amended assessment, respond promptly. Even short delays can trigger interest charges that add up quickly.

3. Lodge On Time, Even If You Can’t Pay

Missing a lodgement deadline can result in both GIC and SIC. Always lodge on time, even if you can’t afford the full payment. The ATO is generally more flexible with taxpayers who meet their reporting obligations.

Tip: ATO payment plans are available, but note that GIC still accrues on unpaid balances—even under a plan.

4. Consider a Tax Debt Loan to Pay Sooner

If you're unable to clear a tax bill and want to avoid accruing non-deductible GIC after 1 July 2025, an ATO tax debt loan could offer a strategic solution. These loans allow you to consolidate your tax debts into a manageable repayment plan—often at a lower interest rate than GIC.

• Loan interest may still be tax-deductible when used to earn assessable income
  
  
• Helps prevent the compounding of non-deductible ATO interest
  
  
• Offers improved cash flow and clearer repayment timelines
  
  

Just ensure the loan is structured appropriately for business use—and always seek tax advice to confirm deductibility.

ATO Payment Plan vs Business Tax Debt Loan

5. Double-Check Before You Lodge

Errors in your tax return—like unreported income or misapplied deductions—can lead to amendments and SIC. Review your figures carefully or engage a registered tax agent to help ensure accuracy and avoid costly corrections.

6. Pay by the Due Date

It may seem basic, but timely payment is the single most effective way to avoid GIC. Be sure to track and meet deadlines for:

• Income tax
  
  
• BAS and PAYG instalments
  
  
• Superannuation contributions
  
  

Interest begins accruing the moment a payment is late.

7. Ask for Help If You’re Struggling

If you're going through hardship—such as illness, natural disaster, or severe business disruption—the ATO may consider remitting interest charges. However, the process is discretionary, and it’s critical to act early and provide documentation.

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Final Reminder

You can still claim GIC and SIC interest charges incurred up to June 30, 2025 on your 2024–25 tax return.

Take this window seriously—don’t miss out on your final opportunity to offset these charges.

Now is the perfect time to:

• Check your myGov or ATO Business Portal
  
  
• Talk to your tax agent or accountant
  
  
• Make sure you're not leaving money (or deductions) on the table

If you owe ATO tax debt or expect to soon, now is the time to check your balance, get advice, and consider your repayment options—before interest charges become even more costly.

Considering an ATO tax debt loan?  Apply Now →

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FAQs

1. Can I still claim ATO interest charges on my 2024–25 tax return?

Yes. GIC and SIC incurred up to 30 June 2025 can still be claimed as tax deductions on your 2024–25 tax return. Charges incurred on or after 1 July 2025 will no longer be deductible.

2. What’s the difference between GIC and SIC?

• GIC (General Interest Charge) is applied when you pay tax late.
  
  
• SIC (Shortfall Interest Charge) is applied when the ATO adjusts your return and finds you underpaid tax, usually due to errors or missing information.
  
  

3. Where do I find GIC or SIC charges in my ATO account?

• GIC appears on your ATO account summary, late payment notices, or GIC-specific letters.
  
  
• SIC appears on amended assessments and is often listed alongside the revised tax amount.
  For individuals, GIC may also be pre-filled in your tax return.
  
  

4. How does the ATO calculate interest on overdue tax?

ATO interest rates are set quarterly. GIC accrues daily at a higher rate (currently over 11%), while SIC applies at a slightly lower rate (currently around 7%). The interest compounds each day until the balance is paid.

5. Can I ask the ATO to remove or reduce these interest charges?

Yes. You can apply for a remission of GIC or SIC if you have a valid reason, such as illness, natural disaster, or serious financial hardship. The ATO assesses each case individually and may ask for evidence.

6. Do GIC or SIC charges apply if I’m on a payment plan?

Yes. If you’ve arranged a payment plan for a tax debt, GIC will still apply daily to the outstanding balance until it’s paid in full. Lodging on time helps reduce risk, but doesn’t exempt interest on late payments.

7. What happens if I claim a deduction for GIC or SIC, but it gets remitted later?

If you previously claimed a deduction and the ATO later remits the charge, the remitted amount becomes assessable income in the year the remission is granted—likely in your 2025–26 tax return.

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Disclaimer

The information in this article is general in nature and is provided for informational purposes only. It does not constitute financial, tax, or legal advice and should not be relied upon as such.

Before making any decisions based on this content, especially in relation to ATO interest charges, tax deductions, or business loan products, you should consider your individual circumstances and consult a qualified tax advisor, accountant, or financial professional.

While every effort has been made to ensure accuracy at the time of writing, tax laws and financial regulations may change. Broc Finance does not accept liability for any loss or damage that may arise from the use of, or reliance on, this information.