What is General Interest Charge (GIC)?
GIC stands for General Interest Charge. It is the interest applied by the Australian Taxation Office (ATO) on unpaid tax liabilities.
Some circumstances when it may apply include:
- a return is lodged and/or paid late;
- there is a tax shortfall because of an amendment or correction;
- an instalment of tax is underestimated.
What is Shortfall Interest Charge (SIC)?
SIC stands for Shortfall Interest Charge.
If your tax return is amended and results in an increase in the tax liability (the “shortfall”), SIC is the interest applied by the ATO on the shortfall for the period between when it would have been due and when the corrected assessment is issued.
How are GIC and SIC calculated?
The GIC or SIC amount is calculated:
- using the ATO’s published quarterly GIC / SIC rates;
- daily, on a compounding basis.
The quarterly GIC and SIC rates are calculated in accordance with the Taxation Administration Act 1953 and published by the ATO on a quarterly basis. The rates are:
| GIC rate | The 90-day Bank Accepted Bill rate published by the Reserve Bank, plus an uplift factor of 7%. | Historical quarterly GIC rates can be found here. |
| SIC rate | The 90-day Bank Accepted Bill rate published by the Reserve Bank, plus an uplift factor of 3%. | Historical quarterly SIC rates can be found here. |
What’s changing?
Since their introduction, GIC and SIC have been tax deductible.
However, the Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024 passed by Parliament on 26 March 2025 amends sections 25-5 and 26-5 of the Income Tax Assessment Act 1997 to deny income tax deductions for amounts of GIC and SIC incurred by a taxpayer from 1 July 2025.
The Government has declared these amendments seek to reinforce the requirements imposed on all taxpayers to correctly self-assess their income tax liability, pay their tax on time, and assist in lowering the amount of collectable debt owed to the ATO.
What you can do
To minimise the impact of these changes, taxpayers can:
Ensure your tax obligations are lodged on time
This means lodging all returns (including income tax, BAS, FBT etc) by their due dates.
You can achieve this by:
- Keeping your tax records and accounting software up to date throughout the year;
- Providing your information to us in a timely manner after the end of the relevant tax period;
- Responding promptly to any queries sent by us;
- Setting reminders in your phone or calendar for important tax dates advised by us;
- Ensuring you provide all relevant information to us at the time of preparing your return so the risk of a later amendment being required is reduced.
Ensure your tax liabilities are paid on time
GIC is completely avoided by paying on time. To help with paying on time:
- Ensure you have provisioned for tax liabilities in your cash flow planning;
- Schedule tax payments in your online banking platform as soon as you receive them so payment dates aren’t missed;
- Pay PAYG Instalments correctly so you are not left with a large tax bill at year end;
- If you are unsure of your upcoming tax payments, contact us to schedule in annual tax planning, or request a tax payments timeline.
Seek alternative sources of funds
ATO interest rates are notoriously high, and now come with the added cost of being non-deductible. If you don’t have sufficient funds to pay on time, consider whether there are alternative, more cost effective, sources of funds you could use. The legislative changes only make GIC/SIC non-deductible – they don’t affect the deductibility of interest on loans taken out for the purpose of funding ordinary business cash-flow (which might include tax liabilities).
Request a remission of GIC or SIC where appropriate
If you do end up being charged GIC or SIC, the ATO can apply their discretion to remit GIC or SIC (ie. reverse the interest charge) in certain circumstances. They consider:
- the circumstances that caused the delayed payment resulting in GIC, including whether they were outside the taxpayer’s control (eg. natural disaster, industrial action, the unforeseen collapse of a major debtor or the sudden ill health of key staff)
- how these circumstances prevented you from paying by the due date
- what steps you’ve taken to reduce the delay.
There are instructions on the ATO website for how to request a remission of interest.
If you are concerned about the impact these changes will have on you or your business, contact us to discuss a plan tailored to your needs and circumstances.
