ATO general interest charge and shortfall interest charge

GIC and SIC — the two regimes

The general interest charge (GIC) and shortfall interest charge (SIC) are both forms of interest charged by the ATO on unpaid tax. The GIC is imposed under Division 1 of Part IIA of the Taxation Administration Act 1953 (Cth) and relates to unpaid tax liabilities. The SIC is imposed under Division 280 of Schedule 1 to the Taxation Administration Act 1953 (Cth) and specifically applies to income tax shortfalls that arise from amended assessments.

GIC applies from the due date of the original tax liability. This means interest accrues on the unpaid amount from that date until it is fully paid.

The SIC, in contrast, applies for a different period. It covers the time from the original due date of the tax until the day before the amended assessment was issued.

How the rates are set

The general interest charge (GIC) and shortfall interest charge (SIC) rates are determined each quarter. They are based on the 90-day Bank Accepted Bill (BAB) rate published by the Reserve Bank of Australia.

The GIC rate is calculated by adding 7% to the 90-day BAB rate. The SIC rate is calculated by adding 3% to the 90-day BAB rate.

The ATO publishes the GIC and SIC rates on its website each quarter.

Deductibility change from 1 July 2025

The Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 changes the treatment of the general interest charge (GIC) and shortfall interest charge (SIC) for taxpayers. Prior to 1 July 2025, both GIC and SIC were deductible under section 25-5 of the ITAA 1997.

From 1 July 2025, GIC and SIC are no longer income tax deductions. This means taxpayers cannot claim these amounts as deductions in their tax return.

This change does not affect the deductibility of penalties, which were already considered non-deductible.

Remission

The Commissioner of Taxation has the power to remit both the general interest charge (GIC) and the shortfall interest charge (SIC). This power is granted under section 8AAG and section 280-160 of Schedule 1 to the Taxation Administration Act 1953.

Remission is a discretionary decision. The Commissioner may consider remission where there has been fair and reasonable behaviour, an error by the ATO, or circumstances beyond the taxpayer’s control. The ATO’s general remission policy is detailed in Public Ruling LA 2011/12.

To request remission, taxpayers must submit their request in writing and provide supporting evidence.