Under the Treasury Laws Amendment Bill 2024, businesses and individuals will no longer be able to claim tax deductions for General Interest Charges (GIC) and Shortfall Interest Charges (SIC) as of 1 July 2025.
What are GIC & SIC?
GIC and SIC are two types of charges that are applied to taxpayers who are late to or make errors when paying their tax. In some cases, taxpayers may be required to pay both.
- General Interest Charges (GIC) are applied when taxpayers do not pay their tax on time.
- Shortfall Interest Charges (SIC) is when errors in tax returns result in underpaid taxes. SIC applies from the date the tax should have been paid until an amended assessment is made, at which point GIC kicks in.
Currently, both GIC and SIC are deductible for income tax purposes. The current rates are 11.34% for GIC and 7.34% for SIC.
Why This Change Matters
By removing these deductions, the government aims to promote timely and accurate tax compliance, ensuring fairness for businesses and individuals who meet their tax obligations on time.
Going forward, any late payments will attract non-deductible interest charges, increasing the overall tax burden on those who fall behind.
To minimise the impact of these changes, consider the following steps:
Settle Outstanding Tax Liabilities – Ensure all tax payments are made on time to avoid unnecessary interest charges.
Apply for Remission Where Possible – If payment delays are unavoidable due to exceptional circumstances, you may be eligible to request a reduction or waiver of these charges from the ATO.
Review Tax Debt Management – Assess your current approach to financing tax liabilities and explore alternative solutions, such as business loans or financing facilities, to avoid costly interest charges.
Staying proactive with tax payments will be more important than ever. If you need assistance reviewing your tax obligations, reach out to us for guidance.