General Interest Charge (GIC)

 

 

You may be subject to the General Interest Charge (GIC) if you have unpaid tax liabilities, including late or unpaid taxes, levies, or penalties. The GIC is calculated daily on a compounding basis, which increases the amount you owe over time.

Instances when GIC applies
GIC applies in two primary situations:

• Late or Unpaid Tax Amounts: If you fail to pay your tax obligations on time or leave them unpaid beyond the due date.
• Excessive Shortfall in Income Tax Instalment: When you significantly underpay your estimated or varied income tax instalments.

GIC Calculation

The GIC rate is reviewed quarterly, and is calculated based on your outstanding amount of unpaid tax. The interest compounds on a daily basis, leading to a growing debt until you settle your tax liability.

You are informed about the amount of GIC applied through a statement of account, a late payment notice, or a GIC notice. These documents detail the additional amount you owe due to the GIC.

The table provides the GIC annual rates and corresponding GIC daily rates for the specified quarters in the mentioned income years.

Tax treatment of GIC

Tax Deduction

You can claim a tax deduction for the GIC incurred in the same year it accrue, for income years up to the year ending 30 June 2025. This means you can reduce your taxable income by the amount of GIC, potentially lowering your overall tax liability. However, starting 1 July 2025, GIC will no longer be tax deductible.

Disclosure of Remitted GIC

If you claimed or can still claim a deduction for the GIC incurred, you must disclose any remitted GIC in the year when the remission occurs. This ensures transparency in your tax reporting and prevents double benefits from GIC deductions.

ATO GIC remission policy

If you find yourself in a situation where you have incurred General Interest Charge (GIC) due to late payment of debts, you have the option to request a partial or full remission of the GIC from the ATO.

This request can be made if you face extenuating circumstances, which may include:

Delay Not Caused by You
If the delay in payment was beyond your control and not due to any fault on your part (for example, occurrences like natural disasters, industrial action, unforeseen collapse of a major debtor, or sudden ill health of key personnel), and you took reasonable steps to minimize the delay.

Delay Due to You, But Efforts to Reduce Delay
In cases where the delay in payment was caused by your actions, but you made reasonable efforts to minimize the delay, and it would be fair and reasonable to grant a remission.

Serious Financial Hardship
If paying the full amount of GIC would result in serious financial hardship for you, you may be eligible for remission to alleviate the burden.

Under these extenuating circumstances, your situation will be assessed and then concluded whether it is appropriate to reduce or eliminate the GIC imposed on your late payments.

Each case is evaluated on its merits, and it is essential to provide relevant evidence and documentation to support your request for GIC remission.