The government’s announcement to deny income tax deductions for ATO interest charges has now been legislated. This means that taxpayers can no longer deduct General Interest Charges (GIC) or Shortfall Interest Charges (SIC) incurred on or after 1 July 2025.
When are ATO interest charges incurred?
You become liable for an ATO interest charge depending on the type of interest charge you incur:
GIC imposed on unpaid tax liabilities is incurred on a daily basis.
SIC imposed on an unpaid income tax shortfall is incurred in the year you are served a notice of amended assessment.
ATO interest charges incurred on or after July 1
If you have incurred any GIC or SIC on or after 1 July 2025, then you cannot deduct this from your income tax. This includes all GIC and SIC in respect of outstanding or late payments of tax for income years both before and after 1 July 2025.
ATO interest charges incurred before July 1
If you have a GIC or SIC incurred prior to 1 July 2025, then you won’t be impacted by the changes to the law. Your ATO interest charges will continue to be deductible for the 2024-25 and earlier income years.
More information is available at the following link:
Denying deductions for ATO interest charges | Australian Taxation Office
For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au.