ATO late lodgement penalty: up to $364 per 28 days, capped at $1,820 per document · interest 11.43% p.a. compounding daily · See how to remit them →
What GIC is and when it starts
General interest charge applies automatically to any tax not paid by its due date, including income tax, BAS amounts, PAYG instalments and unpaid penalties. No warning letter is needed and there is no discretion at the start: the clock begins the day after your due date and compounds daily until the balance hits zero.
For a lodged return, the due date is on your notice of assessment. For overdue returns, here's the sting: once you lodge, GIC is backdated to when the tax would have been due, so the interest was accruing during all the years you didn't lodge.
The current GIC rate and how it's set
That 7 point uplift means GIC sits well above a typical mortgage rate at all times. There are two interest types: GIC applies to overdue debts, while the lower shortfall interest charge applies to shortfalls from amended assessments for the period before amendment. If your bill came from an audit or amendment, part of your interest may be SIC, which matters when requesting remission.
The July 2025 change that doubled the pain
Until 30 June 2025, GIC was tax deductible, so a taxpayer in the top bracket effectively paid about half the headline rate. From 1 July 2025, GIC and SIC are no longer deductible. The full rate is now a real after-tax cost for everyone, which flips the maths: almost any commercial refinancing is now cheaper than carrying ATO debt.
What daily compounding actually does to a debt
| Time unpaid | Interest accrued | Debt total |
|---|---|---|
| 3 months | about $290 | $10,290 |
| 6 months | about $588 | $10,588 |
| 1 year | about $1,211 | $11,211 |
| 2 years | about $2,568 | $12,568 |
| 5 years | about $7,709 | $17,709 |
Compare that with the failure to lodge penalty, capped at $1,820. On any meaningful debt, interest is the bigger enemy within the first year or two. Estimate both for your situation with the penalty and interest calculator.
How to stop, reduce or escape GIC
Four ways to cut the interest bill
Lodge and pay what you can, immediately
GIC accrues on the outstanding balance, so every dollar paid today stops compounding today. Never delay lodging because you can't pay in full.
Set up a payment plan, with eyes open
Plans stop ATO debt-collection escalation, but GIC keeps accruing on the unpaid balance during a plan, so front-load payments where you can.
Consider refinancing the debt
A commercial rate below the GIC rate now beats carrying non-deductible ATO interest. For business borrowers, interest on a loan used to pay a business tax debt may itself be deductible.
Request remission
GIC can be remitted in full or part where delay was caused by the ATO, by disasters or serious illness, or where paying would cause genuine hardship and you have acted in good faith.
For the remission wording that works, see our remission request guide and template, and for the payment side, ATO payment plans.
GIC rate checked for the July to September 2026 quarter.
Frequently asked questions
What interest does the ATO charge on overdue tax bills?
Is ATO interest tax deductible?
Does GIC keep accruing on a payment plan?
What's the difference between GIC and SIC?
Can ATO interest be waived?
How is GIC calculated day to day?
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.