ATO late-payment interest will soon cost you more
What’s changing?
If you pay your tax bill late, the ATO adds extra interest called the general interest charge (GIC). Until now you could claim that interest back on your tax return. From 1 July 2025, you won’t be able to claim it. In other words, every dollar of late-payment interest will come straight out of your pocket.
Why you should care
| Before 1 July 2025 | After 1 July 2025 |
|---|---|
| Late-payment interest reduces your taxable income (you get some back at tax time). | You get no tax relief. The full amount is a real, extra cost. |
What to do before 30 June 2025
Check if you owe the ATO anything. Look at your online tax account or ask us.
Pay it off or refinance. A short-term bank loan usually costs less and its interest is still claimable.
If you’re fighting an ATO assessment, rethink your strategy. Losing after 1 July means heavier, non-claimable interest.
Example
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You owe the ATO $10,000 and wait six months to pay.
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GIC might add about $700.
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Before 1 July 2025: you could claim that $700 and get up to ~$230 back (assuming a 32.5 % tax rate).
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After 1 July 2025: you get $0 back – the whole $700 is gone.
Bottom line
Settle any tax debts or arrange a lower-cost loan before 30 June 2025. Waiting could make your tax delay far more expensive.
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