The ATO general interest charge (GIC) compounds daily on unpaid tax debts and can exceed the original liability within a few years. The Commissioner of Taxation holds a legal discretion to remit GIC fully or partially where circumstances justify it. Successful remission turns on full compliance, documented evidence of hardship or ATO-caused delay, and a structured written submission.
We work with SME owners, sole traders, and directors who discover, often too late, that the interest sitting on top of their core debt has grown into a separate crisis. This article explains how GIC works, what the ATO weighs when it decides whether to remit, and the steps that give your application the best chance of success.
What the General Interest Charge Is and Why It Grows So Fast
The GIC is the interest the ATO charges on unpaid tax liabilities across virtually every tax type: income tax, goods and services tax (GST), pay as you go (PAYG) withholding, and fringe benefits tax (FBT).[1] It starts accruing from the day after the liability was due and compounds daily.
The rate is set quarterly, pegged to the 90-day bank bill rate plus a 7 percentage point uplift.[1] In practical terms that has placed the GIC at around 10 to 11 per cent per annum in recent years, well above any standard commercial finance rate. Daily compounding at that rate means a debt left unaddressed for two or three years can carry an interest component that rivals or exceeds the original principal.
Between 2019 and 2025, the total balance of GIC owed to the ATO grew by 185 per cent, outpacing the 94 per cent growth in uncontested tax debt over the same period.[3] That gap tells you something important: the interest problem is growing faster than the underlying debt problem, and it is disproportionately landing on small business owners and privately owned groups who lack the resources to resolve disputes quickly.
The ATO’s Legal Power to Remit GIC
The Commissioner of Taxation has a broad statutory discretion to remit GIC, either in full or in part, under the tax administration legislation.[1] Parliament wrote this power directly into the law, recognising that circumstances sometimes prevent timely payment through no fault of the taxpayer.
The ATO administers this discretion through Practice Statement PSLA 2011/12, which sets out the administrative framework officers must apply when assessing remission requests.[5] Knowing that framework exists, and understanding how it is applied, is the difference between a request that reads as a plea and one that reads as a legal submission.
The Tax Ombudsman completed a formal review of the ATO’s GIC remission decision-making in March 2026. The review found inconsistent decision-making, vague guidance, and poor communication were producing unfair outcomes for taxpayers.[3] The ATO agreed to all four recommendations, including a commitment to offer interest-free payment plans for eligible taxpayers who enter and maintain compliant payment arrangements.[4] Those changes are being implemented now, which makes 2026 a more favourable environment for well-prepared remission applications than the tightened approach the ATO took from late 2023 onward.
Grounds for General Interest Charge Remission
The ATO does not remit GIC because a business is under pressure. It remits GIC when specific, documented circumstances justify it. Three categories carry real weight.
Circumstances beyond your control. Natural disasters, severe illness or death of a director or key person, sudden and unexpected business disruption such as a major cyberattack or prolonged supply chain collapse: these are the clearest grounds.[1] The critical word is “unexpected.” A cash flow squeeze caused by ordinary trading conditions will not meet this threshold on its own.
ATO-caused delay. Where GIC accumulated because the ATO took an unreasonable time to process a lodgement, resolve a dispute, or respond to a request, remission is strongly arguable.[2] You should not carry the cost of the ATO’s own administrative timeline. Document every date: when you lodged, when you followed up, when the ATO responded. That chronology is your case.
Financial hardship combined with active compliance. Where paying the full GIC would push an otherwise viable SME into insolvency, the ATO has grounds to remit.[1] The critical qualifier is “otherwise viable.” The ATO will look at your compliance history. A track record of lodging on time and engaging proactively with the ATO when problems arose signals good faith and materially improves your position.
If you are also facing director penalty notices (DPNs) alongside an accumulating GIC balance, the stakes are significantly higher. Read our article on Director Penalty Notices: What They Mean and Why Timing Matters before you take any steps on the underlying debt.
How to Build a GIC Remission Application That Lands
A remission request is a legal submission governed by a statutory framework. The ATO officer assessing it applies that framework to decide whether to exercise the discretion in your favour. Your job is to give them the evidence they need to reach that outcome.
Step 1: Get compliant before you apply. All outstanding lodgements, including business activity statements (BAS) and income tax returns, must be up to date. The ATO will not remit interest for a business that remains non-compliant. Meeting this requirement is a hard threshold the ATO applies before any remission request is considered.[1]
Step 2: Establish a formal payment arrangement. Set up an ATO payment plan on the principal debt. This demonstrates good faith and signals that you are actively reducing the liability. Note that GIC continues to accrue on the outstanding balance until you pay in full or receive remission, so the sooner a plan is in place, the better.[2]
Step 3: Gather specific, dated evidence. Generic statements of hardship carry little weight. The ATO needs:
- Financial statements and cash flow forecasts showing the hardship period
- Bank statements demonstrating a sudden, documented drop in revenue
- Medical certificates, police reports, or insurance correspondence where relevant
- A precise timeline of ATO administrative delays, with reference numbers and dates
- Any correspondence showing you contacted the ATO proactively when the problem arose
Step 4: Submit a structured written request. You or your tax agent can lodge a GIC remission request through ATO Online Services for Business.[1] The submission should identify the specific periods and amounts of GIC you are seeking to remit, set out the chronology of events that caused the delay, and explain the steps taken to rectify the position as soon as circumstances allowed.
Step 5: Know your review rights. If the ATO refuses your request, that decision is reviewable. You can seek an internal review and, if that fails, escalate to the Administrative Review Tribunal. The Tax Ombudsman can also assist where you believe the ATO’s process was unfair.[4]
For a broader view of how ATO debt recovery escalates and what options exist at each stage, see our guide on ATO Debt Recovery Methods.
Why Insider Knowledge of How the ATO Decides Changes the Outcome
Most remission requests fail because they are framed as appeals to sympathy rather than as submissions that engage the statutory criteria. The ATO officer reading your request is applying a framework. A submission that maps your circumstances directly onto that framework, uses the right language, and provides evidence keyed to each criterion is structurally different from one that simply describes hardship.
Our founder, Nitin Saby, spent years inside the ATO as a Tax Counsel Network Law Interpretation Specialist and Tax Specialist Executive before serving as Tax Principal at a top-10 CAANZ firm. That background shapes how we approach remission applications: we know what the officer on the other side of the desk is looking for, and we build submissions that speak directly to those criteria.
If your GIC balance has grown to a point where it threatens the viability of your business, the time to act is now. For context on how the ATO selects cases for closer attention, see 5 Ways the ATO Selects Who to Audit. And if a formal tax dispute is already underway, our overview of the Six Stages of a Tax Dispute will help you understand where you stand.
A Note on the Shortfall Interest Charge
The shortfall interest charge (SIC) is a separate interest charge that applies where an amended assessment raises additional tax, covering the period from when the original payment was due to the date of the amended assessment.[1] The SIC rate is lower than the GIC rate (the bank bill rate plus 3 percentage points rather than 7), and it is also subject to remission. Where an audit or review has produced an amended assessment, both the SIC and any subsequent GIC should be addressed in your remission strategy.
FAQ
How can I request a remission of the general interest charges imposed by the ATO?
Lodge a written remission request through ATO Online Services for Business, or ask your tax agent to do so on your behalf. The request must identify the specific GIC amounts and periods, explain the circumstances that caused the delay, and provide supporting evidence. All outstanding lodgements must be current before you apply, and a formal payment arrangement on the principal debt strengthens your position significantly.[1]
How do I request a remission of interests and penalties?
A GIC remission request and a penalty remission request are separate processes, though they can be submitted together. Both require a written submission that maps your circumstances to the ATO’s statutory criteria, supported by dated, specific evidence. The ATO assesses each on its own merits. Where both apply, address them in the same submission but keep the arguments for each distinct, as the criteria differ.[1]
How can I get rid of ATO debt?
ATO debt is reduced through a combination of payment arrangements, objections where the underlying assessment is disputed, and remission applications for interest and penalties where grounds exist. Ignoring the debt is the most expensive option: GIC compounds daily and the ATO has broad recovery powers including garnishee notices, DPNs, and credit reporting. Engaging early, getting compliant, and presenting a clear position to the ATO produces better outcomes than waiting.[2] See our full breakdown of ATO Debt Recovery Methods for more detail.
What is the ATO’s ruling on director’s fees and how does it relate to debt?
Director’s fees are assessable income and subject to PAYG withholding obligations. Where a company has failed to remit PAYG on director’s fees, the unpaid amount can become the subject of a director penalty notice (DPN), making the director personally liable for the debt. GIC accrues on unpaid PAYG from the day after it was due. If your company has outstanding PAYG obligations tied to director’s fees, read our article on Director Penalty Notices: What They Mean and Why Timing Matters before taking any action.[1]
The GIC balance on your ATO account is not fixed. The law gives the Commissioner a genuine discretion to reduce or remove it, and the Tax Ombudsman’s 2026 review has pushed the ATO toward more consistent and fairer application of that discretion. A well-built submission, filed at the right time, with the right evidence, can materially reduce what you owe.
Contact Saby+Partners to discuss your GIC position and find out what a remission application could achieve in your specific circumstances.
[1] Australian Taxation Office, “Remission of interest charges,” https://www.ato.gov.au/individuals-and-families/your-tax-return/if-you-disagree-with-an-ato-decision/dispute-interest-or-penalties/remission-of-interest-charges
[2] Aptum Legal, “General Interest Charge Remission: When the ATO Will Actually Remit It and How to Ask,” https://aptumlegal.com.au/blog/general-interest-charge-remission-when-the-ato-will-actually-remit-it-and-how-to-ask/
[3] Australian Policy Online / Tax Ombudsman, “In the interest of fairness: a review into the ATO’s management of remission of general interest charge,” https://apo.org.au/node/333663
[4] Tax Ombudsman, “Review: ATO’s management of remission of the general interest charge,” https://taxombudsman.gov.au/reviews_reports/atos-management-of-remission-of-the-general-interest-charge/
[5] CCH Learning, “Managing General Interest Charge Remission Requests with the ATO,” https://www.cchlearning.com.au/e-learning/managing-general-interest-charge-remission-requests-with-the-ato/