GIC impositions soared to $9.4bn in FY2025, ATO data reveals

Annual general interest charge (GIC) impositions soared from $1.82 billion in the 2020 financial year to $9.43 billion in FY2025, ATO figures released through a FOI request lodged by The Australian Financial Review reveal.

Tax Ombudsman Ruth Owen said that the remission of debt interest charges was a ‘hot topic,’ noting her office had received 134 complaints in the last financial year regarding the ATO’s enforcement approach.

Off the back of this feedback, she launched a review into the way the ATO manages the interest on unpaid tax debt and encouraged stakeholders to have their say.

“We’ve heard complaints about a general lack of consistency and transparency in the ATO’s approach to interest charges. Tax professionals and taxpayers have told us that it seems to be a matter of potluck as to who gets their interest reduced or remitted and who has to pay in full,” Owen said.

“We know the ATO has reduced the number of cases in which it agrees [to] reduction or remission and I think that requires further investigation as to why and what is fair and reasonable, when taking the taxpayer’s circumstances into account.”

The GIC is a charge applied to tax debts, typically when there is a tax shortfall due to an amendment or a correction, an instalment of tax is underestimated or a return is lodged late. As of October to December 2025, the annual GIC rate was 10.61 per cent.

ATO data obtained by the Financial Review indicated that the Tax Office was tightening its enforcement approach on GIC remissions requests. In FY2025, it approved 76 per cent of GIC remission requests, down from 88 per cent in FY2024.

The data also indicated that GIC impositions had soared above their pre-pandemic levels. In FY2018, impositions were $4.78 billion and remissions were $1.93 billion. In contrast, FY2025 impositions were $9.34 billion, while $2.56 billion was remitted.

ATO assistant commissioner Sonia Corsini told the Financial Review that the ATO’s growing imposition of GICs reflected large amounts of outstanding tax debt.

“The amount of interest that is applied in a year is a direct product of the amount of debt that remains unpaid,” she said.

“Where the debt amount increases, so does the total interest amount.”

However, Owen expressed concern that the ATO’s approach to debt interest charges was causing taxpayers to face “growing debts that [were] beyond their means to pay,” even when they wanted to meet their obligations.

“Taxpayers have an obligation to pay their tax bills, and we know most people are trying to do the right thing, but there are certain circumstances where we think the ATO could take a more compassionate approach to debt collection,” Owen said.

“There may be a range of factors that impact a taxpayer’s ability to pay their debt on time and our current economic environment is contributing to financial stress in many households.”

The Ombudsman added that the GIC being made non-tax-deductible had “significantly” increased repayment costs for taxpayers.

On 26 March, parliament passed amendments that would restrict tax deductions for GIC and shortfall interest charge (SIC) incurred on or after 1 July 2025.

Under the amendments, the Commissioner would still have the discretion to remit interest charges where it is fair and reasonable to do so, taking into consideration the circumstances which led to the delayed payment of tax liabilities or the tax shortfall.

Given the growing impacts of debt interest charges on taxpayers, the Ombudsman set out to review several aspects of the ATO’s current enforcement approach. These included whether the ATO’s remissions decisions were “fair and reasonable,” and whether there were opportunities to improve the GIC remissions system.

As part of the review, the Tax Ombudsman encouraged stakeholders to take part in a survey to give feedback on the matter, and said it would be accepting online submissions until 10 October 2025.

“Although the GIC is an important element of the tax system, to ensure that those who deliberately avoid paying tax are not given an unfair advantage, it should not punish those trying to do the right thing,” Owen said.

“This issue can affect the livelihood of small businesses and taxpayers already doing it tough – I encourage anyone that’s been impacted by an interest charge remission decision to contribute to our review and help us to thoroughly investigate the matter.”

The review is set to examine the following matters:

• Whether ATO policy, communications and guidance to staff and the public [about how it considers GIC remission requests] are clear.
• The reason behind the ATO’s recent decision to tighten up its remission of GIC and the intended outcomes.
• 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 not to remit their GIC.
• Whether there are opportunities to improve GIC remission systems and processes in light of the growing cost of impact on taxpayers.