GIC: Grim Interest Consequences

The General Interest Charge (GIC) is the interest charged by the Australian Taxation Office (ATO) on overdue tax balances.

Over the past few years, the enforcement of GIC by the ATO has drastically changed, turning it from a slap on the wrist to a dangerous penalty.

Enforcement	Historical Treatment	Current Treatment
Annual Rate (prior to daily compounding)	Around 10%, with a dip to 7% during COVID and a peak of 15% in 2008	10.65%
Annual Impositions*	$1.82b (2020)	$9.43b (2025)
Remission chance*	88% (2024)	76% (2025)
Remission Application format	By phone, then by form, to detail reasonably unforeseeable circumstances outside of taxpayer’s control	Detailed form including circumstances, how the debt would have been paid on time, actions taken to minimise the payment delay
Deductibility	Tax Deductible	Non-deductible

* Figures obtained from the ATO by The Australian Financial Review

Business owners should recognise that late payments to the ATO have increased consequences, and ensure that they calculate and pay their tax liabilities on time.

To achieve this, we recommend:

• Annual tax planning to estimate tax positions 6-12 months before the payment due date; and

• Scheduling work with tax practitioners 6 months in advance, to ensure no delays, with both tax agent and business staff aligned on deliverables and deadlines.

For more information, please contact us. To receive our tax updates, follow us on LinkedIn.