Upcoming Changes to Tax Deductions for Interest Charges

From 1 July 2025, under the Treasury Laws Amendment Bill 2024, businesses and individuals will no longer be able to claim tax deductions for General Interest Charges (GIC) and Shortfall Interest Charges (SIC).

Currently, GIC and SIC are both specifically deductible for income tax purposes when incurred. GIC applies to unpaid amounts, while SIC is for shortfalls discovered through amendments made by the Australian Taxation Office (ATO). The current GIC and SIC rates are 11.34% and 7.34% respectively.

By denying deductions, the government aims to encourage timely and accurate tax compliance, leveling the playing field for those who already meet their obligations on time.

This proposed change reinforces the importance of staying on top of your tax payments, especially with the upcoming tax deduction changes. Going forward, any late payments will incur non-deductible interest charges, potentially increasing your overall tax liability.

To prepare for these proposed changes we recommend that you:

Review your outstanding tax liabilities and ensure they are settled on time to avoid unnecessary interest charges.

In cases where delayed payments are unavoidable due to exceptional circumstances, you may be able to apply to the ATO for remission of these charges.

Consider how you currently manage and finance your tax debts, and whether existing financing facilities may be better suited to assist with settling outstanding tax liabilities.

If you’re unsure about any upcoming tax payments or need assistance managing your liabilities please reach out to your Vincents adviser.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.