You receive a letter from the ATO. Or you log in to your business account. And there it is: two types of interest charges stacking up alongside your tax debt. One is labelled GIC. The other, SIC.
If you're staring at both, wondering why you're being charged twice and what these actually mean for your cash flow, you're not alone.
Most business owners and directors hit this moment the same way. They thought tax debt was just about the principal amount. Then they discover the interest, compounding daily, turning a manageable problem into something that feels like it's spiralling.
The difference between GIC and SIC matters. Not just for understanding what's on your statement, but for working out what you can negotiate, what you can challenge, and what's going to hit your bottom line harder than you think.
Let me walk you through it.
Key Takeaways
- GIC (General Interest Charge) applies when you're late paying any tax you already know you owe – it's the ATO's cost of you using their money.
- SIC (Shortfall Interest Charge) applies when the ATO discovers you underpaid tax in a prior year and amends your assessment – it runs from the original due date to the amended assessment date.
- GIC rates are higher (currently around 11.43% p.a.) compared to SIC (around 7.43% p.a.), and both compound daily, so delays cost real money.
- From 1 July 2025, GIC and SIC accrued in income years starting on or after that date are no longer tax-deductible, increasing the true cost to your business.
- Remission is possible but requires a clear reason: ATO error, genuine hardship, or circumstances genuinely beyond your control – not just "we forgot to pay".
- Both charges interact with payment plans and disputes, and understanding when each applies helps you make smarter decisions about whether to pay, negotiate, or challenge the underlying assessment.
What the ATO Means by GIC and SIC
GIC and SIC are both interest charges. But they're not the same charge applied twice. They serve different purposes and kick in at different times.
General Interest Charge (GIC) is what the ATO applies when you're late paying tax you already know you owe. You lodge your BAS on time, but you don't pay the GST liability. Or you lodge your income tax return and don't pay the balance by the due date. That's GIC territory.
Think of it as the cost of using the ATO's money when you were supposed to pay them.
Shortfall Interest Charge (SIC) is different. It applies when the ATO discovers that you underpaid tax in a previous period and issues an amended assessment to correct it. The shortfall was always there, you just didn't know about it (or did, and didn't report it). SIC runs from the original due date of that tax through to the date the ATO issues the amended assessment.
The key distinction: GIC is about being late. SIC is about being wrong.
And you can end up with both. SIC covers the period before the ATO corrects the mistake. GIC takes over after the amended assessment if you still don't pay.
Most businesses don't see SIC until an audit or amended assessment lands. By that stage, the charge has been accruing silently for months or years. GIC, by contrast, shows up on your account immediately when a payment is overdue.
When Each Charge Applies in Practice
Let's make this concrete with scenarios you might recognise.
Scenario 1: Overdue BAS payment
You lodge your quarterly BAS on time. The return shows you owe $50,000 in GST. But cash flow is tight, so you don't pay for three months.
From the original due date, GIC starts accruing on that $50,000. Every day. Compounding. By the time you pay, you'll owe the $50,000 plus several thousand dollars in GIC, depending on how long you delayed.
This is straightforward. You knew what you owed. You didn't pay on time. GIC applies.
Scenario 2: Amended assessment after an income tax audit
Your business lodges its 2023 income tax return in October 2023. Tax paid. Case closed.
Eighteen months later, the ATO audits the return. They discover that you underreported income by $200,000. They issue an amended assessment, increasing your taxable income and the tax payable.
Here's where SIC comes in. The extra tax was always owed from the original due date (say, December 2023). But you didn't know about it until the amended assessment in April 2025. SIC applies from December 2023 to April 2025 on the shortfall amount.
After the amended assessment is issued, if you don't pay the additional tax immediately, GIC starts running on the unpaid balance.
So you can see both charges on the same debt: SIC for the period before the ATO corrected the error, GIC for the period after.
Scenario 3: Both GIC and SIC appear on your account at once
Let's say you already have overdue PAYG instalments from earlier quarters. GIC is accruing on those.
Then the ATO issues an amended assessment for a prior year. SIC applies to the shortfall from that amended assessment, covering the period before the assessment was issued.
Now your ATO account shows GIC on the old overdue amounts and SIC on the newly discovered shortfall. It looks like you're being charged twice. You're not. You're being charged different interest rates over different periods on different amounts.
Understanding the breakdown matters because it affects what you can challenge and what you might be able to negotiate.
When you see both charges on your statement, map each line item back to its source: which amount relates to late payment of known liabilities (GIC) and which relates to a shortfall discovered through amendment (SIC). That clarity is essential before you engage the ATO or consider objecting to the assessment.
How GIC and SIC Affect the Real Cost of a Tax Debt
Let's talk numbers.
As at March 2025, GIC runs at approximately 11.43% per annum. SIC runs lower, at around 7.43% per annum. Both compound daily.
That might sound manageable on paper. It's not.
On a $100,000 tax debt, GIC adds roughly $11,430 per year. But because it compounds daily, if you leave it unpaid for two years, you're not just adding $22,860. You're compounding on an ever-growing balance.
SIC is lower, yes. But remember, SIC runs from the original due date to the amended assessment date. If an audit drags on for two years before the amended assessment is issued, SIC has been quietly accruing the entire time. On a $200,000 shortfall, two years of SIC at 7.43% p.a., compounding daily, adds close to $32,000 before GIC even starts.
Here's the part most directors underestimate: these charges don't pause while you're negotiating a payment plan. They don't pause while you're objecting to the assessment. They keep running.
So if you're in dispute with the ATO and it takes twelve months to resolve, GIC or SIC (or both) are adding thousands of dollars to your liability every quarter.
Now layer in one more thing: from 1 July 2025, GIC and SIC accrued in income years starting on or after that date are no longer tax-deductible. Previously, these charges were deductible as costs of managing your tax affairs. Not anymore, for new accruals.
What does that mean? It increases the effective after-tax cost of the interest. If your business pays tax at 30%, previously you'd get a 30% tax benefit on the deduction. Now, for debts accruing in income years from 1 July 2025 onwards, you wear the full cost.
That turns an $11,430 annual GIC charge into a real $11,430 hit to cash flow, not $8,000 after the tax deduction. For businesses carrying significant ATO debts, that's a material change in the cost of deferring payment.
The loss of deductibility from 1 July 2025 shifts the economics of how you manage ATO debt. Paying sooner, or negotiating remission early, now saves more than it used to because you can't claw back part of the interest cost at tax time.
What Changed from 1 July 2025: Deductibility and Tax Planning Implications
Let's unpack the change in plain terms.
For income years starting before 1 July 2025, GIC and SIC were generally deductible under the "cost of managing your tax affairs" category. That meant if your business was charged $10,000 in GIC, you could claim that $10,000 as a deduction, reducing taxable income.
From 1 July 2025, that stopped. GIC and SIC accrued in income years starting on or after 1 July 2025 are no longer deductible.
Note the timing carefully. If your business has a standard 30 June year-end, the rule change affects GIC and SIC accrued from 1 July 2025 onwards. If you have a substituted accounting period (say, 31 December year-end), the rule applies from the start of the income year that begins on or after 1 July 2025.
Why does this matter for your planning?
Because it changes the real cost of delay. Previously, paying the ATO late had a hidden subsidy: the tax deduction softened the blow. Now, every dollar of GIC or SIC you incur is a full dollar out of your cash flow, with no offset.
This affects decision-making in three ways.
First, the case for paying the ATO quickly, or entering a short payment plan, is now stronger. The longer you defer, the more you pay in non-deductible interest.
Second, if you're in a position to negotiate remission of GIC or SIC, the value of that remission just went up. Remitted interest used to save you 70 cents on the dollar (after the deduction). Now it saves you the full dollar.
Third, if you're considering disputing an amended assessment, you need to factor in that GIC or SIC continues to accrue while the dispute is live, and it's no longer softened by a deduction. That doesn't mean you shouldn't dispute, but it does mean the cost of a long dispute is higher than it used to be.
For mid-sized businesses and private groups carrying ATO debts in the hundreds of thousands or millions, this change in tax treatment is a board-level issue, not just an accounting footnote.
If your business is facing a significant ATO debt and you're weighing up whether to pay now or defer, model the cost with and without the deduction. For debts accruing from 1 July 2025 onwards, the after-tax cost is the full headline rate, and that changes the break-even point on alternative funding (like bank finance or director loans).
Remission, Negotiation and Payment Plans: Where Interest Fits
Can you get GIC or SIC reduced or wiped? Yes. But not easily, and not just because you ask.
The ATO has discretion to remit (reduce or cancel) GIC and SIC in certain circumstances. The key word is discretion. They're not obliged to remit just because the amount is large or paying it would be inconvenient.
What actually persuades the ATO to remit?
Genuine hardship. If paying the interest would cause serious financial hardship to you or your business, and you can demonstrate that, remission is possible. This isn't "we'd prefer not to pay" hardship. It's "paying this will push us into insolvency or prevent us meeting payroll" hardship. You'll need to back it up with financials.
ATO error or delay. If the interest accrued because of an administrative error or unreasonable delay on the ATO's part, they'll often remit. For example, if they took eighteen months to process an objection that should have taken three, and GIC piled up in the meantime, you have a case.
Circumstances beyond your control. Natural disasters, serious illness, or other events that genuinely prevented you from paying or engaging. Again, this is a high bar. "We were busy" doesn't qualify.
Prompt engagement and cooperation. If you've been transparent, engaged early, and made genuine efforts to resolve the debt (even if you couldn't pay in full immediately), the ATO is more likely to view remission favourably, particularly if your compliance history is otherwise good.
What doesn't work: arguing that the interest rate is unfair, or that you didn't understand GIC would apply, or that you need the remission to make a payment plan affordable. Those arguments rarely succeed.
Now, what about payment plans?
If you enter into a payment plan with the ATO, GIC continues to accrue on the outstanding balance. The ATO doesn't freeze interest just because you've agreed to pay over time. That's a hard reality many businesses discover too late.
However, if you stick to the payment plan and your circumstances justify it, the ATO may consider remitting some of the interest at the end, particularly if the plan was the only way to keep your business viable and you met every commitment.
But here's the critical part: don't assume remission. If the interest is material, negotiate it upfront or as part of a settlement. If you're resolving a dispute, interest is often on the table as part of the overall deal.
For businesses in serious financial distress, or facing insolvency, sometimes the better path is not to chase remission but to negotiate a settlement of the total debt (including interest) as part of a broader restructure or compromise. That's a conversation for your advisors and insolvency practitioners, not a DIY negotiation.
The ATO's remission guidelines are strict, but they're not inflexible. If you have a genuine case, put it in writing, support it with evidence, and make the request early. The later you ask, the less likely they are to remit, because by then the interest has become a large, established liability.
Seeing GIC and SIC on Your Account: Practical Steps for Directors and Advisors
You log into your ATO account and see thousands of dollars in GIC or SIC, or both. What do you do?
Don't panic. But don't ignore it either.
Step one: Understand the source of each charge.
Print or download a detailed statement. Map each line of interest back to the underlying tax debt. Which amounts are GIC on overdue BAS or income tax? Which amounts are SIC arising from an amended assessment?
If SIC is on your account, that means there's been an amended assessment. Do you know why? Have you received the notice? Do you agree with it? If you haven't seen the amended assessment, get a copy and review it immediately.
Step two: Check whether the assessment is disputed or final.
If the amended assessment is wrong, you have 60 days (in most cases) to lodge an objection. Once that window closes, your options narrow significantly.
If you're considering objecting, understand this: GIC or SIC continues to accrue while the objection is pending. Objecting doesn't freeze the interest. But if you succeed in the objection and the assessment is reduced or withdrawn, the interest will be recalculated based on the corrected amount.
Step three: Talk to your advisor or accountant.
Before you call the ATO, get clear on your position. Do you have the cash to pay? If not, what's realistic? Can you fund a payment plan, or are you genuinely in hardship?
If there's a legitimate basis to challenge the underlying assessment or to seek remission of interest, your advisor needs to help you frame that case properly.
Step four: Engage the ATO early.
If you can't pay immediately, don't bury your head. Contact the ATO, explain your situation, and propose a solution. The ATO is far more willing to work with businesses that engage proactively than those that go silent and let the debt compound.
If you're proposing a payment plan, be realistic. The ATO will assess your capacity to pay. They'll want to see financials. Don't propose a plan you can't stick to, because breaching a payment plan damages your credibility and makes future negotiations harder.
Step five: Consider the broader picture.
Is this a one-off issue, or is it a symptom of deeper compliance problems or cash flow stress?
If your business is regularly incurring GIC because it can't pay tax on time, that's a governance and financial management issue. You need to address the root cause, not just manage the symptoms.
If SIC is arising from repeated amendments or adjustments, that suggests issues with how your tax positions are being prepared or reviewed. That's a compliance and risk issue.
For directors, GIC and SIC aren't just line items on an ATO statement. They're signals. Ignore them at your peril.
If GIC or SIC is accruing because of a dispute over an amended assessment, and you believe you have a strong case, consider whether securing the debt (or part of it) pending resolution makes sense. Securing can sometimes reduce the cost of interest or give you breathing room to focus on the dispute without cash flow pressure. Talk to your lawyer about options.
Integrating ATO Interest into Governance and Risk Settings
Let's step back from the immediate problem and think about this from a governance perspective.
GIC and SIC are lagging indicators. They tell you something went wrong earlier: a payment wasn't made, a tax position was incorrect, or a return wasn't reviewed properly.
For boards and senior management, the question isn't just "how do we deal with this interest?" It's "why did we end up here, and how do we stop it happening again?"
Start with cash flow and payment discipline.
If your business is regularly late paying the ATO, that's a red flag. It might indicate broader cash flow issues. It might indicate that tax obligations aren't being prioritised. Either way, it needs fixing.
Implement systems that flag upcoming ATO payment due dates well in advance. Make tax payments a board-level item if they're material. Don't leave it to finance to scramble at the last minute.
Next, look at compliance processes.
If SIC is showing up because of amended assessments, ask why. Were positions taken that were aggressive or unsupported? Was advice obtained before lodging? Were returns reviewed properly before they went in?
SIC arising from genuine mistakes or oversights is one thing. SIC arising from poor process or inadequate review is another. The latter is a governance failure.
Consider tax as a risk, not just a compliance task.
Too many businesses treat tax as something you hand to the accountant at year-end. That's a mistake. Tax risk is business risk. Significant tax disputes, penalties, and interest can materially affect your financial position and your ability to trade.
Build tax risk into your enterprise risk framework. Make sure management is reporting to the board on tax compliance, lodgement, and payment status regularly.
Finally, understand the cost of inaction.
GIC and SIC compound daily. Every day you defer a decision is a day you're paying interest. The cost of delay is no longer softened by deductibility for new accruals.
Boards that treat ATO debt as "something we'll get to eventually" discover that the debt has doubled by the time they act. That's not strategic. That's negligence.
The businesses that manage ATO debt well are the ones that engage early, understand the charges, and make clear decisions: pay now, negotiate a plan, dispute the assessment, or seek remission. They don't drift.
If your business has a history of late ATO payments or amended assessments, you need to ask hard questions about your tax governance. GIC and SIC are symptoms, not the disease. Fix the underlying issues, or the charges will keep coming.
What to Do Now
You know the difference between GIC and SIC. You understand how they arise, what they cost, and when you might be able to reduce them.
Now comes the decision: what are you going to do about the charges on your account?
If the interest is small and the underlying debt is manageable, pay it and move on. Don't let it compound any further.
If the interest is material, or the underlying debt is disputed, get advice. Map out your options: payment plan, remission application, objection to the assessment, or settlement negotiation.
If the debt is threatening your business, don't wait. Engage early, put a plan together, and execute it rigorously.
GIC and SIC aren't just accounting entries. They're real cash leaving your business, and from 1 July 2025 onwards, they're no longer softened by a tax deduction. The cost of delay is higher than it's ever been.
The businesses that manage this well aren't the ones with perfect compliance. They're the ones that identify the problem early, understand what's driving the charges, and make clear decisions about how to respond.
If you're unsure whether you have a case for remission, or whether the underlying assessment should be challenged, talk to someone who deals with this every day. Don't leave it to hope.
Disclaimer: This article provides general information only and does not constitute legal advice. The application of GIC and SIC depends on your specific circumstances. If you are dealing with ATO interest charges, seek professional advice tailored to your situation.
