Important Tax Update: ATO Interest Now Non-Deductible
If you owe money to the ATO, that debt will soon cost you more. From 1 July 2025, two types of interest — General Interest Charge (GIC) and Shortfall Interest Charge (SIC) — will no longer be tax deductible.
What are these charges?
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GIC: Late payment interest (10.78% p.a. for July–Sep 2025), compounded daily.
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SIC: Interest on underpaid tax due to amended assessments (6.78% p.a.).
Previously, these could be claimed as a deduction, reducing the net cost. From July 2025, that deduction is gone.
Example
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Sally: 45% tax rate → Old net cost of $1,000 GIC: $550 → New cost: $1,000
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Adam: 30% tax rate → Old net cost: $700 → New cost: $1,000
What can you do?
✅ Pay ATO debt ASAP — interest compounds daily.
✅ Explore paying off tax debts with lower-interest loans (check deductibility).
✅ Be proactive: plan cashflow to pay GST, PAYG, etc. on time.
If you’re struggling with tax debt or staying ahead, let’s put a plan in place to protect your bottom line.
