No More Tax Deduction for ATO Interest.

From 1st July 2025, taxpayers will no longer be able to deduct the General

Interest Charge (GIC) and Shortfall Interest Charge (SIC) on their tax returns.

This change, passed by Parliament on 26th March, means taxpayers will

need to reconsider how they manage tax debts.

Under the new rules, the Commissioner can still remit interest charges in

cases where it is fair and reasonable, taking into account the circumstances

surrounding delayed tax payments or shortfalls.

This change is designed to create a more level playing field for those who

already meet their obligations.

What are GIC and SIC?

• GIC (General Interest Charge):

The GIC is imposed on unpaid tax liabilities when taxpayers fail to pay

their tax on time. The GIC rate for the January-March 2025 quarter is

11.42%. The charge accrues daily on a compounding basis until the

overdue amount is paid. It applies to late payments of taxes such as

income tax, GST, or other tax obligations.

• SIC (Shortfall Interest Charge):

The SIC applies to tax shortfalls due to incorrect self-assessment. It

applies from the due date of the tax liability until the Commissioner

issues an amended assessment. Once the assessment is amended, the

GIC applies. The SIC is calculated at a lower rate than the GIC, currently

7.42% for the January-March 2025 quarter.

The key difference between the two is that GIC applies to late tax payments.

In contrast, SIC applies when an assessment is amended, resulting in an

increased liability due to incorrect self-assessment.

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