ATO interest charges are no longer deductible: GIC and SIC from 1 July 2025

No — under enacted law, general interest charge (GIC) and shortfall interest charge (SIC) incurred on or after 1 July 2025 cannot be claimed as an income tax deduction, regardless of which income year the underlying tax debt relates to. GIC and SIC incurred **before** 1 July 2025 remain deductible in 2024-25 and earlier income years. For the 1 July – 30 September 2026 quarter the ATO’s annual rates are 11.43% (GIC) and 7.43% (SIC), both compounding daily.

Key points:
- This is **enacted law, not a proposal**: Schedule 2 of the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 (No. 29 of 2025), which received royal assent on 27 March 2025, denies deductions for [GIC](/technical-resources/glossary#gic) and SIC. The ATO states the change “is now law”.
- It applies in relation to assessments for income years starting on or after **1 July 2025** — so the 2025-26 returns being prepared now are the first affected.
- The test is **when the interest is incurred**, not which year the debt relates to: GIC or SIC incurred on or after 1 July 2025 is non-deductible even where the underlying tax debt is from an earlier income year.
- Current rates for the **1 July – 30 September 2026** quarter: GIC **11.43%** per annum (daily rate 0.03131507%) and SIC **7.43%** per annum (daily rate 0.02035616%). Both compound daily and the ATO resets them each quarter.
- Interest incurred **before** 1 July 2025 still follows the old rules — deductible in 2024-25 and earlier income years — and if it was deducted and is later remitted, the remitted amount is assessable income in the year the remission is granted.
- Remission treatment has flipped for new interest: GIC or SIC incurred on or after 1 July 2025 that the ATO later remits does **not** need to be included in assessable income, because no deduction was available for it.
- A payment plan does not stop the clock — the ATO confirms debts on a payment plan continue to accrue daily-compounding GIC, and none of that interest is now deductible.