If you’ve ever carried a balance with the ATO, you’ll know they charge interest on it — the general interest charge (GIC) and, on amended assessments, the shortfall interest charge (SIC). Until recently, that interest was tax-deductible, which softened the blow.
What changed
From 1 July 2025, GIC and SIC are no longer tax-deductible. The interest rate itself hasn’t gone away — you just can no longer claim a deduction for it, which means the real, after-tax cost of an ATO debt has gone up.
What it means for you
In plain terms: a dollar of ATO interest now costs you a full dollar, where before part of it came back as a deduction. For a business carrying a tax debt across the year, that adds up.
What you can do about it
- Prioritise paying down ATO debt ahead of other (deductible) finance where it makes sense.
- Lodge and pay on time so interest doesn’t start accruing in the first place.
- If cashflow is tight, a structured payment plan is usually cheaper than letting interest build — and we can help you set one up and talk to the ATO.