From 1 July 2025, the general interest charge (GIC) and shortfall interest charge (SIC) imposed by the ATO will no longer be tax-deductible. This change will increase the overall cost of carrying a tax debt, making it more important than ever for you to stay on top of your obligations.
Currently, the ATO applies GIC — compounding daily at a rate of 11.17%, to any unpaid tax or liability past its due date. While this interest has previously been deductible, that benefit is being removed for any GIC or SIC incurred in income years starting on or after 1 July 2025. This applies even if the underlying debt relates to an earlier income year.
What You Should Do Now
To help reduce the financial impact of these changes, now is the time to have conversations and take proactive steps to prepare:
Pay Down ATO Debts Promptly: Reducing or clearing your tax debt before 1 July will help minimise non-deductible interest charges. If a full payment isn’t possible, enter into a short-term payment plan, as interest will still accrue.
Seek Tailored Advice: Every business is different. A personalised review of your tax position can help determine the best course of action before the new rules take effect.
Improve Cash Flow Planning: Set aside funds for obligations like GST, PAYG withholding, and superannuation, so you are prepared when due dates come around.
As always, we are here to assist, so please do not hesitate to reach out to your Client Manager if you have any further questions on (07) 4052 0800.
Noelle Halpin
Business Manager