The increase means both charges have hit their highest levels in more than a decade, since the December quarter of 2012 when the GIC annual rate was 10.62 percent and the SIC annual rate was 6.62 percent.
General Interest Charge
On 1 July 1999, the penalty arrangements for late payment and other obligations were streamlined with the introduction of a uniform tax deductible General Interest Charge (GIC).
The GIC now extends to most taxes, including:
- income tax;
- fringe benefits tax;
- goods and services tax; and
- pay as you go.
The GIC rates are as follows:
Quarter | GIC annual rate | GIC daily rate |
April – June 2023 | 10.46% | 0.02865753% |
January – March 2023 | 10.06% | 0.02756164% |
October – December 2022 | 9.31% | 0.02550685% |
July – September 2022 | 8.00% | 0.02191781% |
Remission of GIC
As a starting point, we would recommend that an application for remission of the GIC be lodged with the ATO.
In deciding whether to reduce or cancel the GIC, the ATO considers the following factors including:
- whether there were any extenuating circumstances that caused the delay in payment;
- what steps you took to relieve the effects of those circumstances; and
- if there are other special circumstances, such as where the payment of the full amount of GIC would result in serious financial hardship for you.
Shortfall Interest Charge
The shortfall is the difference between the amount of tax originally assessed (or refunds you claimed) and the amount of tax you were eventually assessed for (or credits you were entitled to).
The shortfall interest charge (SIC) has a lower rate than the GIC.
This is because taxpayers are usually unaware of a shortfall amount until the ATO tell them. When the ATO tell you of a shortfall in your tax, the ATO will also include an interest charge on the shortfall amount.
The due date for payment of the additional tax and SIC is 21 days after the day the ATO give you notice of the additional tax.
Once the due date has passed, the higher GIC applies to any unpaid tax and SIC.
The SIC rates are as follows:
Quarter | SIC annual rate | SIC daily rate |
April – June 2023 | 6.46% | 0.01769863% |
January – March 2023 | 6.06% | 0.01660274% |
October – December 2022 | 5.31% | 0.01454794% |
July – September 2022 | 4.00% | 0.01095890% |
Remission of SIC
As a starting point, we would recommend that an application for remission of the SIC be lodged with the ATO.
The ATO may consider remitting the SIC where they:
- delay the start of an examination into your tax affairs or the expected time to complete an examination is late due to the ATO’s actions;
- cause periods of unreasonable delay during the course of an ATO examination;
- either the ATO or you experience a delay in obtaining information from a third party during the examination, which is not otherwise available to you; or
- delay processing your amendment request.
What should I do now?
You should speak to your accountant to see if it is possible to have the GIC or SIC remitted.
If the ATO will not remit the GIC and/or SIC, you should speak to a Finance Broker and see if you can borrow the funds to discharge the ATO debt at a lower interest rate.
Please contact your professional adviser if you’d like more information about contacting the ATO and discussing the potential remission of the GIC or SIC.