The Australian Taxation Office’s (ATO) handling of the general interest charge (GIC) is under formal review, after the tax office watchdog received more than 130 complaints about inconsistent and opaque remission decisions.
The general interest charge (GIC) is a financial penalty applied to tax and other liabilities that go unpaid after their due date, designed to encourage the prompt payment of outstanding debts.
Currently set at 10.78% per annum, the GIC compounds daily, adding a real financial sting to tax shortfalls, underestimated tax instalments, and delayed payments.
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Taxpayers can ask the ATO to remit their GIC, with the tax office considering if extenuating factors — like natural disasters, the surprise collapse of a major debtor, or serious illness — contributed to delayed payment.
But as the ATO uses all the tools at its disposal to claw back billions in unpaid tax, some tax professionals fear GIC remission is becoming harder to access or even predict.
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Now, the Tax Ombudsman has launched its formal review of the ATO’s GIC remission strategy to find if tax office practices are clear, reasonable, and consistent.
“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,” said Tax Ombudsman Ruth Owen.
“We know the ATO has reduced the number of cases in which it agrees 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.”
A growing number of small businesses and households are falling behind on their tax obligations due to factors outside of their control, according to the Ombudsman’s announcement.
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And the GIC itself — not just the underlying tax debt — can become “the most unmanageable part of what they owe”.
Crucially, the GIC is no longer tax-deductible from July 1 this year, making the charge even more worrisome for taxpayers.
Some taxpayers now fear remission outcomes can vary depending on which ATO officer reviews the case, or the channel used to file the request, the Ombudsman said.
The Ombudsman’s office received 134 complaints about GIC remission processes in 2024-25.
Separately, the ATO is now consulting on how to “refresh” its approach to offering some forms of taxpayer relief, including interest remissions.
The Ombudsman stresses that it is a very different review to its own.
“Our review is independent and will focus on taxpayer experience, procedural fairness, transparency and consistency in decision-making,” it said in its new terms of reference.
“We have worked with the ATO to minimise undue duplication of effort and to ensure that our review will complement the ATO’s work by providing an external perspective and giving voice to concerns raised by taxpayers, tax professionals and the community.”
Stakeholders are invited to contribute their views to the Ombudsman before October 10, with the final report expected to be published in February 2026.
