From 1 July 2025, a significant change has come into effect regarding the tax treatment of interest charges imposed by the Australian Taxation Office (ATO).
Previously, businesses and individuals could claim a tax deduction for General Interest Charges (GIC) and Shortfall Interest Charges (SIC) incurred on overdue tax liabilities. However, this is no longer the case.
What’s Changed?
As part of recent legislative updates, ATO-imposed interest charges are no longer tax deductible, regardless of when the original debt arose. This means that any GIC or SIC incurred from 1 July 2025 onward will increase your tax liability without offering any offsetting deduction.
What You Should Do:
- Stay on top of your tax obligations to avoid unnecessary interest charges.
- Ensure timely lodgement and payment of BAS, IAS, income tax, and superannuation obligations.
- Review your cash flow and payment plans to minimise exposure to ATO interest.
Need help navigating this change?
Our team at Advisory One is here to support you. Whether you need assistance with payment plans, lodgement schedules, or tax planning strategies, we’re just a call away.
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