Watching interest charges from the Australian Taxation Office (ATO) grow on an unpaid tax debt can be stressful for any business owner. This interest, known as the General Interest Charge (GIC), compounds daily and can quickly turn a manageable debt into a significant financial burden. However, there is a legitimate pathway to seek relief.

Understanding the rules around remission of general interest charge is the first step toward potentially reducing or even cancelling these extra costs, provided you have a valid reason.

Key Takeaways on ATO GIC Remission

• What is GIC? GIC is interest the ATO charges on unpaid tax debts, calculated daily at a high rate to encourage timely payment.
• What is Remission? Remission is the ATO’s discretionary power to reduce or cancel the GIC applied to your debt. It is not automatic and must be requested.
• When Can You Get It? Remission is typically granted in special circumstances, such as serious illness, natural disasters, or significant delays caused by the ATO itself.
• How to Apply: A successful application requires a formal written request supported by strong, specific evidence (e.g., medical certificates, ATO correspondence).
• Why It Matters: A successful remission request can save you hundreds or thousands of dollars in interest, reducing your overall tax debt significantly.
• Professional Help: Engaging a tax professional can increase your chances of a successful outcome by ensuring your case is presented correctly and convincingly.

What is the General Interest Charge (GIC)?

The General Interest Charge (GIC) is interest charged by the Australian Taxation Office (ATO) on unpaid tax liabilities. Its purpose is twofold: to compensate the government for the delayed receipt of funds and to ensure taxpayers who pay late do not gain an unfair financial advantage over those who pay on time.

When GIC applies to tax debts

GIC is not just a penalty for extreme delays; it can apply in many common scenarios for small businesses, investors, and self-employed individuals. These include:

• Late payment of income tax, fringe benefits tax (FBT), or goods and services tax (GST).
• An amended assessment from the ATO that increases the tax you owe for a previous period.
• Late lodgement of a tax return or activity statement that results in a tax liability, such as missing your BAS lodgement dates.
• Underestimating your Pay As You Go (PAYG) instalments, leading to a shortfall at the end of the financial year.

How the ATO calculates GIC

The GIC is designed to be a significant deterrent. It is calculated on the outstanding tax debt and compounds daily. This means that each day, interest is calculated on the growing balance of the original debt plus the interest already accrued.

Daily compounding explained

The daily compounding effect can cause a tax debt to escalate quickly. Interest from one day is added to your principal debt, and the next day’s interest is calculated on this new, larger amount. This “snowball” effect makes it crucial to address ATO debts promptly.

GIC rate principle

The GIC rate is set by law and is tied to the 90-day Bank Accepted Bill rate, plus an uplift factor of 7 percentage points. This makes it substantially higher than most commercial interest rates. The rate is updated quarterly, so it is essential to check current ATO guidance for the applicable rate.

GIC vs SIC Remission

It’s easy to confuse GIC with the Shortfall Interest Charge (SIC). While both are interest charges, they apply in different circumstances and have different rates. Understanding the distinction is vital for any remission of interest ATO request.

Attribute	General Interest Charge (GIC)	Shortfall Interest Charge (SIC)
When It Applies	On late payments or underpayments of tax from the original due date.	On tax shortfalls resulting from an amended assessment, often after an ATO review or taxpayer-initiated amendment.
Purpose	To compensate the Commonwealth for delayed payment.	To compensate for having use of funds that should have been paid as tax earlier, acknowledging the shortfall was unintentional.
Interest Rate	Higher rate (Base rate + 7% uplift factor).	Lower rate (Base rate + 3% uplift factor).

The higher GIC rate reflects its application to more straightforward cases of late payment, whereas the SIC applies to shortfalls where there may not have been an intention to pay late.

What is Remission of General Interest Charge?

Remission of general interest charge is a provision under Australian tax law that allows the Commissioner of Taxation to reduce or cancel the GIC applied to a taxpayer’s debt. This is a discretionary power, meaning the ATO is not obligated to grant remission; it does so based on the specific facts and circumstances of each case.

A successful ATO GIC remission request effectively reduces your overall debt by removing the accumulated interest, leaving you to pay only the primary tax amount.

When the ATO may remit GIC

The ATO will consider remitting GIC when the circumstances that caused the payment delay were outside the taxpayer’s control. A vague claim of “financial hardship” is rarely sufficient. Instead, you need to demonstrate a direct link between a specific event and your inability to pay on time.

Special circumstances

These are events that are unusual, unforeseen, and beyond your control. Strong grounds for a reasonable cause GIC remission include:

• Natural disasters (e.g., flood, fire, cyclone) that directly impacted your ability to manage your tax affairs.
• Serious illness or accident affecting you, a director, or a key family member whose absence disrupted the business.
• Death of a key person in the business or a close family member, leading to significant disruption.

ATO delays or errors

You have a very strong case for remission if the GIC accrued because of the ATO’s actions. Examples include:

• Unreasonable delays in processing your lodgements or correspondence.
• Providing incorrect information that led to the underpayment.
• Errors in ATO systems that prevented you from paying on time.

The core principle is whether it would be “fair and reasonable” to enforce the full GIC. For detailed guidance, tax professionals refer to the ATO’s official policy in Practice Statement Law Administration PS LA 2011/12. For broader industry context, see the Tax Institute’s submissions on ATO GIC management.

How to Request GIC Remission

Knowing when will ATO remit GIC is one thing, but knowing how to apply for GIC remission correctly is what leads to a successful outcome. Follow this structured process to build a compelling case.

Step 1: Gather and Organise Your Evidence

Before writing your request, compile all supporting documents. Evidence is the foundation of your claim. Without it, your request is unlikely to succeed.

• Create a timeline: Detail the key dates and explain precisely how events prevented you from paying.
• Collect documents: Gather medical certificates, insurance claims, official government notices (e.g., for natural disasters), or statutory declarations.
• Keep communication records: Note dates, times, and reference numbers from any previous contact with the ATO about the issue.

Step 2: Write a Clear and Factual Request

Draft a formal written request that is clear, concise, and factual. Avoid emotional language. The goal is to logically connect your circumstances to the late payment.

• State your purpose: Clearly state that you are requesting a remission of the general interest charge.
• Explain the “why”: Detail what happened, when it happened, and how it directly prevented you from meeting your tax obligations.
• Show responsibility: Mention what steps you took to manage the situation once you were able to (e.g., contacting the ATO, lodging overdue documents).

Step 3: Lodge the Request with the ATO

You can submit your remission request in several ways:

• Through your Tax Agent: This is often the most effective method. Your agent can lodge via Online services for agents and ensure all compliance requirements are met.
• Online services: Use myGov (for individuals) or Online services for business to send a secure mail message. Select the appropriate topic and attach your written request and evidence.
• By Post: You can mail your written request and copies of supporting documents to the ATO. Check current ATO guidance for the correct postal address.

The ATO generally aims to process requests within 28 days. For complex cases or those involving ongoing ATO disputes, seeking professional assistance is highly recommended to ensure your case is presented as strongly as possible.

Worked Example: GIC Before and After Remission

Seeing the numbers makes the benefit of a successful GIC remission crystal clear. Let’s look at a common scenario for an Australian small business.

The Scenario: Before Remission

• Taxpayer: J&L Constructions Pty Ltd, a small building company.
• Debt: An income tax assessment of $35,000 was due on 1 December.
• Circumstance: In late November, the company’s sole director, John, suffered a serious medical emergency and was hospitalised for two months, unable to manage the business. The tax debt went unpaid.
• Delay: The payment was made 120 days late.
• GIC Calculation: Assuming a hypothetical GIC rate of 11.5% per annum (always check current ATO guidance for the exact rate), the interest accrued is calculated.
• Primary Tax Debt: $35,000
• GIC Accrued (approx.): $1,323
• Total Amount Owed: $36,323

That $1,323 is a significant extra cost for a business already recovering from a major disruption.

The Outcome: After GIC Remission

John’s accountant helps him prepare a formal request for remission of general interest charge. They submit a written application detailing the timeline of John’s medical emergency, supported by a letter from his specialist and hospital admission records. The request demonstrates that the delay was unavoidable and directly caused by circumstances beyond the company’s control.

The ATO reviews the evidence and agrees that it is a “fair and reasonable” case for remission.

Decision: The ATO remits the GIC in full. The $1,323 interest charge is reduced to $0. J&L Constructions Pty Ltd is now only liable for the original $35,000 tax debt.

This example highlights the substantial financial relief a well-documented ATO GIC remission application can provide.

Common Mistakes That Lead to Rejection

Even with a legitimate reason, many GIC remission requests are denied due to simple, avoidable errors. Understanding these common pitfalls can significantly improve your chances of success.

The primary reason for rejection is a failure to provide sufficient evidence to support the claim. The ATO operates on facts and documentation, not just assertions.

Common Mistakes & Quick Fixes

• Mistake: Vague Claims and No Evidence
  • Submitting a request that says “my business had cash flow issues” without explaining the specific, unforeseen cause.
• Quick Fix: Be Specific and Provide Proof
  • Attach dated evidence that builds a clear timeline. Use medical certificates, insurance claim documents, or a statutory declaration to connect a specific event directly to your inability to pay.
• Mistake: Not Explaining Your Actions
  • Focusing only on the problem without showing that you acted responsibly once you could. The ATO wants to see you took proactive steps.
• Quick Fix: Detail Your Efforts to Comply
  • Explain what you did to mitigate the situation. Mention if you contacted the ATO to advise of a delay or immediately lodged overdue forms once the crisis passed. This demonstrates good faith.
• Mistake: Misunderstanding the Grounds for Remission
  • Requesting remission for normal business challenges, such as a predictable seasonal downturn or poor financial management. These are not considered “special circumstances.”
• Quick Fix: Frame Your Request Correctly
  • Focus your argument on events that were genuinely unforeseeable and unavoidable, such as a declared natural disaster, a sudden serious illness, or a clear error made by the ATO.

Checklist for GIC Remission Requests

A thorough and well-organised application is critical for a successful outcome. Use this checklist to ensure you have everything needed before you submit your request to the ATO. A complete package leaves no room for doubt and presents your case in the strongest possible light.

Evidence and Documentation Checklist

Category	Required Item	Done
Your Details	Your full name and Tax File Number (TFN) or Australian Business Number (ABN).	☐
	The specific tax type (e.g., Income Tax, BAS) and period the debt relates to.	☐
	Any ATO reference numbers from notices or correspondence about the debt.	☐
Your Written Request	A clear statement that you are requesting a remission of the general interest charge.	☐
	A detailed, chronological explanation of the events causing the delay.	☐
	A direct explanation of how these events prevented you from paying on time.	☐
	A summary of the steps you took to meet your obligations once possible.	☐
Supporting Evidence	For illness/accident: Medical certificates, specialist letters, or hospital records.	☐
	For natural disaster: Insurance claims, government relief notices, or photos of damage.	☐
	For ATO error/delay: Copies of correspondence with the ATO, with dates highlighted.	☐
	For other crises: Statutory declarations from third parties, legal documents, etc.	☐

Ensuring you can tick every box on this checklist significantly improves the clarity and credibility of your application. Managing your tax obligations also involves staying on top of things like your quarterly PAYG instalment notice, which can help prevent future debts.

Frequently Asked Questions

Here are answers to common questions about the remission of general interest charge in Australia.