Important tax change: no more deductions for ato interest charges from 1 july 2025

From 1 July 2025, the ATO will no longer allow taxpayers to claim income tax deductions for General Interest Charges (GIC) and Shortfall Interest Charges (SIC). These are the interest amounts the ATO applies to unpaid or underpaid tax debts.

What this means for you:

• GIC and SIC incurred before 1 July 2025 will still be deductible under current rules.
• GIC and SIC incurred on or after 1 July 2025 will not be tax-deductible.
• This change applies to all taxpayers, including individuals, businesses, and super funds.
• If interest is later remitted, the tax treatment depends on when it was incurred.

This change encourages timely and accurate tax payments, so it's important to avoid interest charges going forward.

Please contact our office if you'd like to review your tax planning or discuss strategies to minimise your risk.

Article posted  26/05/2025