A General Interest Charge (GIC) is a punitive charge imposed by the Australian Taxation Office (ATO) when a taxpayer has failed to pay their principal tax debt by the respective due date or when the ATO has completed a review or audit and made an amendment to a notice of assessment, resulting in an underpayment of tax (a tax shortfall). In most cases, GIC accrues on your principal tax debt when a taxpayer has lodged their income tax returns or business activity statements late and there is tax payable.

​

The ATO calculates GIC on the total amount of principal tax that has not been paid by the respective due date at a daily compounding rate. The GIC rate for the July – September 2024 quarter is 11.36% and changes every quarter. GIC is typically a high rate and can result in a significant tax debt if it remains unpaid.

​

Applying for a Remission of GIC

If you have a GIC that has accrued on your unpaid principal tax debt, you can apply to the ATO to remit all or part of the GIC. The ATO applies a stringent process in deciding whether to remit GIC and maintains discretion to remit GIC in circumstances where it would be fair and reasonable to do so. The Taxation Administration Act 1956 (Cth) governs the ATO’s processes in determining whether to remit GIC. The Commissioner of Taxation (Commissioner) must have regard to all of the facts and circumstances of the particular case. There are four key circumstances in which the Commissioner may remit all or part of a GIC:

1. the circumstances that caused the delayed payment resulting in GIC were outside of the taxpayer’s control and the taxpayer has taken reasonable steps to mitigate those circumstances or the effects of those circumstances;

2. the circumstances that caused the delayed payments resulting in GIC was caused by the taxpayer and the taxpayer has taken reasonable steps to mitigate those circumstances or the effects of those circumstances;

3. there are special circumstances relating to the taxpayer that would result in a fair and reasonable decision to remit all or part of the GIC; and

4. when it is otherwise appropriate for the GIC to be remitted.

​

The Commissioner will also consider:

• the taxpayer’s historical compliance history with their tax obligations;

• the taxpayer’s actions in ensuring that all tax lodgements are up to date;

• the taxpayer’s actions in paying all or part of the outstanding tax debt prior to requesting a remission of GIC

• the actions taken by the taxpayer to mitigate the circumstances resulting in the outstanding tax debt;

• any other circumstances that the taxpayer can show evidence of that resulted in the outstanding tax debt.

​

The application undertaken by a taxpayer for a remission of GIC is primarily based on their factual circumstances and the onus is on the taxpayer to satisfy the Commissioner that a remission of GIC is warranted.

​

A remission of GIC can be requested by a taxpayer over the phone, however, it is highly recommended to engage an Australian tax lawyer to prepare an effective remission of GIC request in writing to grant the best prospects for success.

​

Examples of Considerable Circumstances

There are a wide range of circumstances that the Commissioner would consider when a taxpayer applies for a remission of GIC. These include:

• severe health or medical issues suffered by the taxpayer or suffered by a close family member of the taxpayer which required significant time and costs in dealing with such severe health and medical issues;

• being impacted by a natural disaster such as floods, droughts or bushfires which has resulted in the taxpayer suffering severe financial issues and losing significant necessities;

• significant delays in receiving third party information or significant failures by your tax agent or accountant resulting in delays relating to lodging your income tax returns or other tax obligations, and you have taken reasonable attempts to attain the third party information or chase up your tax agent or accountant or engaging a new tax agent or accountant to sort out your tax obligations; or

• if the taxpayer has always maintained a good historical compliance history with their tax obligations and can show that the outstanding tax debt was an isolated event.

​

Please note that this list is non-exhaustive and there are a large number of circumstances that the Commissioner would consider when a taxpayer applies for a remission of GIC.

​

How We Can Help

Adria Law are experts in advising individuals and businesses on their prospects of success in applying for a remission of GIC and preparing an effective letter to the Commissioner explaining their circumstances and how these circumstances impacted their ability to pay their outstanding tax debt on time.

​

If you are an individual or business that requires assistance in understanding their prospects of success and preparing a letter to the Commissioner for the remission of GIC, contact our experienced lawyers today for a free consultation.