The ATO general interest charge is the daily-compounding interest the Australian Taxation Office adds to unpaid tax debts, calculated at an annual rate of 10.65% for the January–March 2026 quarter and 10.96% for April–June 2026.1 It starts the day after a due date passes, keeps running while you’re on a payment plan, and, since 1 July 2025, is no longer deductible on your tax return.
When the Charge Starts Running
GIC begins the day after any tax liability goes unpaid. That includes income tax, quarterly BAS amounts, GST, PAYG instalments, fringe benefits tax, and superannuation guarantee charge amounts. You don’t get a warning letter first. Interest accrues automatically from the day after the due date and compounds each day until the balance is cleared.
If the ATO amends an assessment and finds you underpaid earlier, a separate charge called the Shortfall Interest Charge fills the gap between the original due date and the amended assessment. GIC then takes over on anything still unpaid 21 days after the amended notice issues. SIC uses the same base rate as GIC but adds a 3 percentage point uplift instead of 7, making it roughly 4 percentage points cheaper per year. Like GIC, SIC compounds daily, and SIC incurred on or after 1 July 2025 is also non-deductible.
How the Rate Is Built and Why Compounding Matters
The annual GIC rate is the Reserve Bank’s 90-day Bank Accepted Bill rate plus a fixed 7 percentage point uplift. The ATO divides that annual figure by the number of days in the calendar year to get a daily rate, then recalculates each quarter using the bill rate from the middle month of the preceding quarter.
The 2026 rates published so far:
- January–March 2026: 10.65% per annum (0.02917808% daily)
- April–June 2026: 10.96% per annum (0.03002740% daily)
Daily compounding does more work than most people expect. Each day’s interest is added to the balance, and the next day’s interest is calculated on the new, higher figure. A $10,000 debt left untouched for a year at 10.65% grows to roughly $11,123, not $11,065. The longer the debt sits, the faster it accelerates.
Payment Plans Don’t Stop the Interest
Entering a payment plan with the ATO doesn’t pause GIC or reduce the rate. Interest keeps compounding daily on whatever principal is still outstanding. The ATO’s own guidance is direct about this: paying the debt off in the shortest period possible is the only way to cut the total GIC you pay.
That has practical consequences when you negotiate an arrangement. A 12-month plan on the same principal costs meaningfully more in interest than a 6-month plan, and the longer the tail, the more each extra month adds. You can apply for remission of GIC that builds up during a plan, but having a plan in place isn’t itself a ground for remission.
GIC Is No Longer Tax-Deductible
This is the change most likely to catch you off guard in 2026. Under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025, GIC and SIC incurred on or after 1 July 2025 cannot be claimed as a deduction.
The cutoff turns on when the charge is incurred, not when the underlying debt arose. If your tax debt relates to the 2022–23 income year but interest continues to accrue in 2026, none of that interest is deductible. GIC incurred before 1 July 2025 stays deductible for the 2024–25 and earlier income years. Entities with a substituted accounting period lose the deduction from their next accounting period beginning after 1 July 2025.
The remission side of this lines up in the way you’d expect. If you claimed a deduction for GIC incurred before 1 July 2025 and that amount is later remitted, you include the remitted amount as assessable income in the year of the remission. If GIC incurred on or after 1 July 2025 is remitted, there’s nothing to include, because you never deducted it.
Asking the ATO to Remit the Charge
The ATO can cancel or reduce GIC under section 8AAG of the Taxation Administration Act 1953. Remission isn’t automatic and each request is assessed on its facts. Practice Statement PS LA 2011/12 sets out the grounds:
- The delay was caused by circumstances outside your control, such as a natural disaster, serious illness, or the death of a family member who managed your finances, and you took reasonable steps to fix things once you could.
- The delay was partly your doing, but remission is fair and reasonable in the overall circumstances, for example where a genuine calculation error contributed and you acted to limit the damage.
- Special circumstances that don’t fit the other categories but make reduction fair on the particular facts.
- An “otherwise appropriate” ground reserved for senior ATO officers where none of the above fits but remission is still warranted.
Delay caused by the ATO itself, such as incorrect advice, processing hold-ups, or system issues on their side, falls squarely within grounds for remission. Your compliance history and how open you’ve been during the process also weigh into the decision.
Lodging the Request
You can request remission online, by phone, or by mail. The ATO requires its GIC remission application form (an Excel spreadsheet on their website), with a separate form for each taxpayer and each type of interest charge. Supporting evidence matters. The ATO lists medical certificates, letters from tax professionals, financial statements, police reports, court orders, and letters from financial institutions as examples of documentation that helps.
To lodge online, log into your ATO online services account, open a new secure mail message, pick the relevant topic, choose “Remission of general interest charge” as the subject, and attach your form and evidence. Phone requests involving more than $2,500 in interest are escalated to a dedicated team rather than decided on the call. The ATO will also look at your lodgment history, payment records, and asset information on their systems alongside what you submit.
If the ATO Refuses
You can lodge a formal objection at no cost if the ATO refuses your remission request or you disagree with how GIC has been applied. You generally have 60 days from the date of the decision. Set out your grounds clearly and include any further evidence. The ATO’s Dispute Assist service offers free help to vulnerable individuals and small businesses working through the process.
If the objection outcome still doesn’t resolve things, you can seek external merits review through the Administrative Review Tribunal, which replaced the Administrative Appeals Tribunal in October 2024. The ART is independent of the ATO and can confirm, change, set aside, or substitute a new decision. You’re generally limited at the ART to the grounds you raised in your objection unless the Tribunal orders otherwise, so it’s worth being thorough at the objection stage. For assessment disputes you must prove the assessment is excessive; for other decisions you must show the decision should not have been made or should have been made differently.