From time to time, businesses often have unpaid tax debts with the Australian Taxation Office – whether arising from income tax, goods and services tax or other federal taxes.
In 2024, the total federal collectable tax debt by the ATO was approximately $52.8 billion. These tax debts collected by the ATO arise from1:
- Individuals (A$4.2 billion)
- Small businesses (A$34.8 billion) and
- Privately owned wealthy groups (A$10.0 billion)
What are GIC & SIC?
General Interest Charge (GIC) and Shortfall Interest Charge (SIC) are additional interest expenses payable by taxpayers to the ATO on unpaid tax debts after the due date. SIC applies when an income tax assessment is amended, resulting in an increase tax liability.
Both GIC and SIC are imposed on a daily compounding basis. For example, in the March 2025 quarter, the GIC annual rate is 11.42% and the SIC annual rate is 7.42%.
Currently, and in the year ending 30 June 2025, the GIC and SIC are deductible for income tax purposes as provided under subsection 25-5(1)(c) of the Income Tax Assessment Act 1997. This may be subject to change from 1 July 2025.
Can you get GIC or SIC remitted?
The ATO has power to remit GIC or SIC payable by a taxpayer. However, the ATO power to exercise a GIC or SIC remission will be dependent on the facts and circumstances of a taxpayer’s particular situation and the events relating to the late payment of the tax debt.
For example, a delay in making payment by a taxpayer or lodging an income tax return where an event arises outside the control of the taxpayer, including natural disaster (e.g. fires or floods) will constitute some of the circumstances that may result in a remission of GIC or SIC.
Late lodgement penalties
Late lodgement penalties are commonly seen together with GIC or SIC as these usually arise from late lodgement of tax returns and BAS. These penalties start from a minimum of $330 and can go up to over $8,000 for large businesses. Penalties are also applied per each instance of late lodgement.
The ATO has power to remit late lodgement penalties and the power to exercise will also be dependent on the facts and circumstances of a taxpayer as with GIC or SIC.
The real cost to you
In recent years, we at Prosperity Advisers have observed the ATO becoming increasingly reluctant to allow remission requests. In fact, successful remission requests are now becoming the exception rather than the norm.
The late lodgement penalties, together with GIC or SIC, will make an otherwise uneventful case of late lodgement of a BAS result in hundreds or thousands of dollars of additional cost to you, with very limited chance of remission.
It is more important than ever to stay on top of your tax lodgement obligations!
GIC and SIC – denying deductions from 1 July 2025
Importantly, in legislation currently before Federal Parliament, for income years commencing 1 July 2025, GIC and SIC is proposed to become non-deductible for income tax purposes (refer Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024 (Cth)).
As at 12 March 2025, the above proposal had not passed Federal Parliament and may not pass Federal Parliament before the next Federal Election.
Given the significant change in ATO’s position on remission of GIC or SIC and late lodgement penalties in recent years, please contact Charles Yuan at cyuan@prosperity.com.au or your principal adviser to discuss how we can assist you with your business’s tax compliance needs.
Managing Tax Debt and Business Finance
Keeping up with tax obligations is crucial to avoiding costly penalties, but we understand that managing cash flow and tax payments can sometimes be challenging. If your business is facing tax debt pressures, exploring tailored finance solutions may help ease the burden.
At Prosperity, our in-house lending specialists can assist with business finance options to help you better manage cash flow and stay on top of your commitments. Whether it’s reviewing existing loans or finding a finance solution that aligns with your needs, our team is here to help.
Reach out to our National Lending Manager Chris Lamb at clamb@prosperity.com.au for a confidential discussion about your business finance options.
Refer. 2024 ATO Annual report, Appendix 7.[1]