ATO Interest Remission: Getting the GIC on Your Debt Reduced

The General Interest Charge on your tax debt - currently 11.43% per annum, compounding daily - can be remitted in part or in full where fair and reasonable circumstances exist, and on multi-year backlogs the accrued interest often exceeds the penalties. Most people fight the penalties and forget the interest; on old debts, that's leaving the bigger number on the table.

Why GIC remission matters more than it used to

Two changes have sharpened this. First, the rate: GIC resets quarterly against the 90-day bank bill rate plus a fixed 7% uplift, and it has sat above 11% through recent years - meaning a debt left alone roughly grows by a third every three years. Second, deductibility: GIC incurred from 1 July 2025 is no longer tax-deductible, converting it into a full after-tax cost more expensive than almost any commercial finance. A $40,000 debt three years old can easily be carrying $13,000+ of pure interest. If a remission application removes even half of that, it has out-earned every other hour spent on the file.

When the ATO remits interest

The framework asks whether it's fair and reasonable for the interest to stand. Grounds that succeed in practice: serious illness or personal crisis during the accrual period; natural disasters; delay caused by the ATO itself (slow processing, incorrect advice, misallocated payments); circumstances where the taxpayer acted reasonably once able - voluntary lodgement of a backlog is itself supportive; and serious financial hardship, where continuing interest defeats any realistic prospect of the debt being cleared. Pure "I couldn't afford it" rarely succeeds alone, but it's almost never alone - there's usually an underlying story, and the application's job is to tell it with evidence.

How to actually apply (and sequence it)

Like penalty remission, interest remission belongs after lodgement - the debt must be quantified - and works best bundled with the penalty application as one coherent narrative: chronology of circumstances, supporting documents (medical, financial, disaster-related), demonstration of voluntary correction, and a forward plan (usually the payment plan proposal) showing remission enables resolution rather than rewarding avoidance. Remission of GIC already paid results in a credit, so even historical interest isn't a lost cause. Decisions you disagree with can be objected to, and partial remission is a common middle outcome worth having.

General information only - not personal tax, financial or legal advice. Consider your own circumstances or speak to a registered tax agent. Remission of penalties or interest and payment plans are decisions of the ATO and outcomes can't be guaranteed.