Review: ATO’s management of remission of the general interest charge

Compliance with taxation obligations is the responsibility of all taxpayers. A key obligation is for taxpayers to pay their tax liabilities as and when they fall due. Failure to do so may lead to the accrual of a general interest charge (GIC) on the unpaid debts. With the current rate at 11%, for some taxpayers the GIC very quickly becomes larger than the original debt.

While it is inarguable that the government and community should be compensated for deliberate late payment of tax liabilities and late payment should not be rewarded, it is also important to recognise that there may be a range of factors that hampers a taxpayer’s ability to pay their liabilities on time.

Taxpayers may seek to have GIC remitted where certain criteria are met. The ATO’s Practice Statement Law Administration PS LA 2011/12 provides guidance on how those criteria are considered in the remission of GIC.

The ATO has publicly stated its intention to take a stricter approach with respect to debt collection and GIC remission and the effects of this shift in the ATO’s approach has been reported widely by stakeholders and in tax and accounting publications. In addition, the law has also been amended so that GIC incurred after 1 July 2025 is no longer tax deductible. As such, it is imperative that ATO GIC decisions are supported by policies, systems and processes that align with principles of good tax administration, such as consistency, transparency and getting it right.

What will we examine?

• Whether ATO communications and guidance to staff and the public about how it considers GIC remission requests are clear
• Whether remission decisions are fair and reasonable and are made consistently for taxpayers in like circumstances, regardless of whether they are represented or unrepresented, and individual circumstances are taken into account
• Whether taxpayers are given adequate reasons.
• Opportunities for the ATO to improve its administration and assessment of GIC remission alongside debt repayment arrangements.