Effective from 1st July 2025, the Australian Taxation Office (ATO) will no longer allow interest charges on tax debts to be tax-deductible.

This change impacts both individuals and businesses with existing or future ATO tax debts, including those on payment plans.

You will continue to have the ability to apply to request the remission of any interest payable. The ATO may remit the interest charges in circumstances where it is fair and reasonable to do so.

We strongly recommend reviewing your strategy for managing current and upcoming tax debts. At present, the ATO's General Interest Charge (GIC) rate is 11.17% annually. With the upcoming change to deductibility, you may want to consider securing finance from external parties, at lower interest rates, especially since the interest on these loans would still be tax-deductible.

We can assist you in managing your tax liabilities in a timely manner or engage with the ATO on your behalf to avoid interest and penalties.

Please contact our office if you have any queries in relation to this matter.