How the ATO general interest charge works

The general interest charge, usually shortened to GIC, is what the ATO adds to a tax liability that was not paid by its due date. It sits in the Taxation Administration Act 1953 and it applies automatically. Nobody at the ATO decides to charge it to you. It attaches to the balance the day after the money was due.

It is not a fine and not a penalty for doing something wrong. Penalties are separate and have their own names: failure to lodge on time, false or misleading statement, failure to withhold. GIC is the price of holding money that belonged to the Commonwealth, and that distinction changes how a remission request is treated.

It applies across most of what sits on an integrated client account: income tax, GST reported on an activity statement, PAYG instalments and PAYG withholding.

The GIC rate is a formula, not a judgement call made about your account. It takes a published benchmark bank bill rate and adds a fixed uplift set in legislation. The ATO then publishes the resulting annual rate, and the daily rate derived from it, for each quarter.

Two things follow. The rate moves with the interest rate environment, so a balance carried across several quarters is not carried at one price. And because of the legislated uplift, it sits well above what a secured business loan would ordinarily cost. We do not print the current figure here for the same reason we never quote a lender’s rate: it changes, and you should read it from the source.

• The quarterly GIC rates are published on ato.gov.au, with the annual rate and the daily compounding rate side by side.
• Your integrated client account statement shows the charge that has actually been applied, period by period.

How it accrues

Daily

Rate reset

Quarterly

Amortisation

None

Term

No end date

Deductible from 1 July 2025

No

Where the rate is published

ato.gov.au

Simple interest draws a straight line. Compounding interest draws a curve. GIC is worked out on the closing balance each day, and that day’s charge is added to the balance that the next day’s charge is calculated on. Over a quarter the difference is small. Over two or three years it is the whole problem.

The practical consequence is the one owners find hardest to see coming. A payment that only covers accrued interest never touches the principal, and an arrangement whose instalment sits close to the daily accrual can run for years with the balance barely moving. That is not the plan failing. The instalment was never large enough to be a repayment.

The shortfall interest charge applies where an assessment is amended and you turn out to owe more than you were first assessed. It covers the period between the original due date and the amended notice, and it runs at a lower rate than GIC. The logic is straightforward: you were not on notice of the shortfall, so you are not charged as though you had ignored a known debt.

Once the amended notice’s own due date passes, GIC takes over. Two charges, two periods, one balance. Read a statement closely after an audit or an amendment so you know which charge you are looking at, because remission arguments differ between the two.

GIC

General interest charge. Applied automatically to a liability that was not paid by its due date, calculated daily and compounding daily.

SIC

Shortfall interest charge. Applies where an assessment is amended upward, covering the period between the original due date and the amended notice. It runs at a lower rate than GIC.

Integrated client account

The ATO account that most activity statement liabilities, PAYG and credits pass through. It is where the charge actually appears, period by period.

Remission

The Commissioner’s discretion to reduce or remove interest already charged. It is a discretion, not an entitlement, and it does not alter the underlying tax.

Payout figure

The exact amount required to clear an account on a stated date. It moves daily while interest is still running, which is why lenders ask for a recent one.

The ATO can remit GIC in part or in full. It is a discretion, not an entitlement, and it is not a negotiation about the tax itself. The Commissioner looks at whether the delay was beyond your control, what you did once you knew, and whether remitting would be fair to everyone who paid on time.

1. 01

   Get lodgement current first

   A remission request from a business with unlodged activity statements rarely lands well. Lodgement is the first evidence that the account is being managed rather than avoided.

2. 02

   Write the request in facts, not feelings

   Dates, what happened, what you did about it, and what evidence you have. Illness, a natural disaster, a failed debtor, an error by a previous agent. Attach the documents.

3. 03

   Say what happens next

   A remission request reads very differently when it sits beside a credible plan to clear the balance, whether that is a payment arrangement being honoured or a refinance already in assessment.

4. 04

   Keep paying while you wait

   GIC continues to accrue while a request is considered. A remission request is not a stay of recovery and it does not pause the clock.

Remission is not something to build a plan around. Ask for it, then structure the finance as though the answer will be no.

A payment arrangement does not pause GIC. It changes the ATO’s collection posture, not the arithmetic underneath it. Interest keeps accruing on the reducing balance for the whole term of the plan.

Work out the daily GIC accrual on the current balance from your statement, then compare it to the daily equivalent of the instalment. If the instalment is not comfortably larger, the arrangement is not repaying anything.

• The balance is close to where it was twelve months ago, despite every instalment being paid.
• New activity statement liabilities are being added faster than the plan is reducing the old ones.
• The arrangement has had to be renegotiated more than once, each time with a longer term.