[Tax] ATO's GIC application

For quite some time, some companies have treated the ATO as an unsecured, non-financial institution and delayed paying their taxes, while always paying the ATO’s interest on time—a practice commonly referred to as an “ATO loan.”

1. ATO Loan

GIC and SIC are no longer tax-deductible expenses from 1 July 2025.

The denial of any deductions for interest on late tax payments signals that these charges are purely punitive/corrective.

2. GIC Application

   
   

The governing rules for remission are set out in s 8AAG TAA53 provding three key ways for the GIC application:

(1) where the delay in payment was due to circumstances within the taxpayer’s control (for example, their own mistake or cashflow issues) — here the test includes whether the taxpayer took reasonable action to mitigate the circumstances;

(2) where the circumstances were outside the taxpayer’s control (for example, natural disaster, serious illness) — here also the taxpayer’s response and mitigation efforts are relevant; and

(3) where special circumstances make it fair and reasonable to remit (a broadly worded test, essentially “it is otherwise appropriate to do so”).

Since the end of COVID, tax agents have seen a stricter remission posture to the GIC applicants.

Disclaimer: This article is intended to provide general information only and does not constitute professional advice for specific circumstances.  It should not be relied upon as a substitute for tailored advice.