By Nitin Saby, Founder, Saby and Partners Wise Tax Advisers
If you owe the ATO money, interest is quietly eating your balance every single day. The General Interest Charge compounds daily at a rate that currently sits above 11 percent per year. Worse, from 1 July 2025 you can no longer claim a tax deduction for GIC or SIC. That change alone has made every dollar of interest hurt twice as much.
Here is the good part. The ATO can remit that interest. Full stop, partial cut, or nothing at all, the decision sits with them, and the quality of your request decides the outcome. I have spent over 20 years in Australian tax, including time inside the ATO as a Director in large business and international tax. I have seen what works and what gets binned. Here is my playbook.
What is General Interest Charge?
GIC applies to unpaid tax debts, late lodgements that turn into liabilities, and shortfall amounts after the original due date. It compounds daily. The rate is set quarterly using the 90 day Bank Accepted Bill rate plus an uplift factor of 7 percent. That uplift is the punitive bit. It is designed to make ATO debt more expensive than commercial finance, so you have a reason to pay on time.
Shortfall Interest Charge is the cousin of GIC. SIC applies when an amendment increases your tax liability for a prior year. It runs from the original due date until the ATO issues the amended assessment. After that date, GIC takes over.
Both are now non deductible for periods on or after 1 July 2025. If you are carrying old debt, the cost of delay has gone up sharply.
When the ATO will consider remission?
The Commissioner has a discretion under section 8AAG of the Taxation Administration Act 1953. Three pathways matter.
One – Circumstances beyond your control. Natural disasters, serious illness, death in the family, a key staff member leaving with the books, a cyber attack, a bank error, an ATO processing delay. You did not cause the delay and you could not reasonably have prevented it.
Two – Circumstances within your control where it would be fair and reasonable to remit. You made a mistake but you acted quickly to fix it, you have a clean compliance history, and paying the full GIC would cause genuine hardship or be disproportionate to the underlying conduct.
Three – Circumstances where remission is otherwise appropriate. This is the catch-all. ATO delays in processing, conflicting advice from the ATO itself, or system errors fall here.
What makes a remission request actually succeed?
Most requests fail because they read like an apology letter. The ATO is not looking for sorry. They are looking for facts that fit their published guidelines in PS LA 2011/12. Build your case around four pillars.
Cause. What happened, when, and why it stopped you from paying or lodging on time. Be specific with dates. Vague stories lose.
Evidence. Medical certificates, hospital records, insurance claims, bank statements showing the dishonour, emails with your bookkeeper, police reports for fraud, BOM data for floods or fires. Documents move the file. Words alone do not.
Compliance history. Pull your lodgement and payment history before you write a single sentence. If you have been clean for years, lead with that. If you have a few black marks, acknowledge them and explain what changed.
Action taken. Show what you did the moment you realised the problem. Did you call the ATO. Did you enter a payment plan. Did you pay the primary tax even if you could not cover the interest. Speed signals good faith.
The structure I use for client submissions
Open with a one paragraph summary that names the taxpayer, the periods, the GIC amount you want remitted, and the ground you are relying on. Decision makers read the first 100 words and skim the rest. Make those words count.
Then a facts section in plain chronology. Dates down the left, events on the right. No drama, no adjectives.
Then a grounds section that maps your facts to PS LA 2011/12 and section 8AAG. Quote the guideline category you fit into. Show the ATO officer you have done their job for them.
Then a conclusion with the exact remission amount you are asking for and your preferred outcome. Attach every document referenced in the facts. Number the annexures.
Common mistakes that kill a remission request.
Asking too late. The longer you wait, the weaker your story looks. Apply as soon as the debt is paid or a payment plan is in place.
Asking for too much. If your case only supports partial remission, ask for partial. Overreaching makes the officer suspicious of everything else.
Blaming your accountant without evidence. The ATO has heard it a thousand times. If your agent genuinely failed you, get a statutory declaration from them or proof of professional negligence.
Ignoring the primary debt. You will not get interest remitted while the original tax remains unpaid and you are not on a payment plan. Fix the principal first.
Sending a wall of text with no documents. If it is not in writing and attached, it did not happen.
What to do right now if you are carrying ATO debt?
Pull your running balance account through Online Services for Business or ask your tax agent. Identify how much of the balance is GIC versus primary tax. Work out which periods the GIC relates to.
Pay the primary tax if you can, or enter a payment plan today. Interest keeps running until the balance is cleared, so every day matters more now that GIC is not deductible.
Gather evidence for any period where something went wrong. Illness, disaster, fraud, ATO error, agent failure. If you have a story, you have a case.
Lodge a written remission request through the ATO portal or by letter. Be specific about the amount, the periods, and the ground.
If the ATO refuses or only partially remits, you have review rights. A formal objection is available in some cases, and Federal Court review is available for the discretion itself on administrative law grounds. Most matters never need to go that far if the first request is built properly.
The bigger picture for 2026
The deductibility change that started on 1 July 2025 has shifted the economics of ATO debt for every business in the country. Carrying a 50,000 dollar GIC balance used to cost you the after tax equivalent of around 7 to 8 percent. Now it costs you the full sticker price. For a company on 25 percent tax, that is roughly a 33 percent increase in the real cost of the same debt.
That makes two things true. First, paying down ATO debt is now one of the highest return uses of cash in your business. Second, every legitimate remission application is worth more than it was a year ago. The juice is worth the squeeze.
If you want a second set of eyes on a GIC remission request, or you are sitting on a debt and you are not sure where to start, that is exactly the work we do at Saby + Partners. Former ATO insider, boutique focus, and we know how the file looks from the other side of the desk
Disclaimer. This information is general in nature and does not take into account your personal circumstances. Australian taxation rules are complex and subject to change. You should consult a qualified tax adviser before acting on anything in this article.