As a part of the Federal government’s mid-year economic and fiscal outlook (MYEFO) announced yesterday, the Treasurer has announced that interest on late payments of taxes will not be tax deductible from 1 July 2025.

The Australian Taxation Office (ATO) charges General Interest Charge (GIC) on late payments of known tax liabilities, and Shortfall Interest Charge (SIC) in circumstances when a tax liability increases from what was originally assessed. This can arise through a self-assessed adjustment, or ATO audit activity.

Interest payable to the ATO adds up quickly as it is calculated at high rates (presently 11.38% for GIC and 7.38% for SIC) and compounds daily. SIC can also relate to multiple years in cases of tax audits.

Denying tax deductions significantly increases the cost to taxpayers who are subject to them.

These changes make correctly calculating, declaring, and paying your tax on time even more critical.

Contact Pilot

If you are concerned about the impact of this announcement on you or your business, please contact Murray Howlett or your Pilot advisor on 07 3023 1300.