General interest charge (GIC) on your ATO statement of account: what it is and how to reduce it

The general interest charge, usually shortened to GIC, is interest the ATO charges on unpaid tax debts. It accrues daily and it compounds, so it is calculated on the growing balance rather than on the original amount alone.

Daily compounding is the part that matters practically. A debt left alone for a year does not grow by a fixed amount, it grows by an amount that itself grows. That is the mechanism behind a balance that keeps moving even when you have not been assessed for anything new.

GIC is separate from a failure to lodge penalty. One is interest on money owed, the other is a charge for lodging late. You can have either without the other, or both together. Our general interest charge explainer goes into the detail.

Because a tax amount was not paid by the time it was due. That is the whole trigger. It is not a judgment about you and it is applied automatically.

It commonly appears in larger amounts for people catching up on several years at once, because older debts have had longer to compound.

It also appears on accounts where a payment plan is already running. That surprises people, but a payment plan does not stop GIC accruing. It sets a schedule for paying the balance; interest continues on what remains unpaid while the plan runs.

The balance keeps growing, and the growth accelerates because of the compounding. A debt that felt manageable can become materially larger over a few years without anything else changing.

A growing balance also makes a payment plan harder to structure, because the instalments have to outrun the interest before they start reducing the debt. The payment plan calculator shows what different instalment amounts actually do to a balance over time.

And an unresolved and growing debt is more likely to attract firmer recovery action than a debt that is being actively dealt with.

Lodge first. If any returns or statements are still outstanding, the balance on your statement is not final, so there is no point negotiating it yet. Lodging fixes the figure. It can also reduce it, where a later year produces a refund that offsets an earlier debt.

Then deal with interest and the debt. GIC can be remitted in some circumstances, so a remission request is worth making where the facts support one. Our guide on getting GIC reduced or remitted explains what those circumstances look like and how a request is framed. The remaining balance can then go onto a payment plan.

Get a plan in place rather than waiting. Because the charge compounds daily, the cost of waiting is real and continuous. A free assessment establishes the true balance, what interest and penalties are on it, and what a realistic arrangement looks like, on a fixed fee.