When a tax debt goes unpaid or an amended assessment reveals a shortfall, the ATO applies interest, and for the October to December 2026 quarter the general interest charge (GIC) sits at 11.51% per annum while the shortfall interest charge (SIC) is 7.51% per annum, both compounding daily. Remission of ATO interest is the process the law provides so the ATO can reduce or cancel that interest where it would be unfair to leave it in place.
Remission of GIC or SIC is discretionary and evidence-based, not a formality.
As finance brokers working with a large panel of lenders, Dark Horse Financial deals with the cash flow side of an ATO debt, while remission itself is a tax question for a registered tax agent.
Key Takeaways
- The ATO can remit (reduce or cancel) GIC under section 8AAG of the Taxation Administration Act 1953 and SIC under section 280-160 of Schedule 1 to that Act.
- Remission reduces the interest only, not the underlying tax debt.
- The ATO weighs what caused the late payment, whether it was within your control, the steps you took and your compliance history.
- General economic conditions on their own will not usually justify remission.
- GIC keeps accruing on any unpaid balance while a request is being considered.
- A registered tax agent should prepare or review your request.
What Are GIC and SIC, and Why Would the ATO Remit Them?
GIC and SIC are two different interest charges, and the difference comes down to what triggered the debt. GIC applies when an amount of tax or another liability remains unpaid after its due date, and it is calculated daily on a compounding basis for as long as the debt stays outstanding.
SIC applies specifically to the extra tax that results when the ATO amends an assessment and finds a shortfall. It runs from the original due date of the assessment up to the day before the amended assessment issues, and if the extra tax is not then paid by its new due date, GIC takes over from that point. See Shortfall Interest Charge explained and our guide to the ATO General Interest Charge for more detail.
Both rates are set by formulas in the Taxation Administration Act 1953 (Cth) and are updated every quarter. Because the charges are calculated mechanically, they can produce an unfair result where a business has been affected by genuine hardship or by an ATO delay, which is the policy reason behind the remission power and the ATO’s Practice Statements PS LA 2011/12 (remission of GIC) and PS LA 2006/8 (remission of SIC and GIC for shortfall periods).
Remitting GIC or SIC only reduces the interest, and the tax debt itself still has to be paid in full.
What the ATO Actually Considers When Deciding
The ATO weighs control, conduct and history, not hardship alone.
For GIC, the ATO’s own guidance says it will look at the specific event or circumstances that caused the late payment, how that event prevented you from paying on time, whether the cause was within or outside your control and what reasonable steps you took to reduce the delay once it started, along with your prior lodgment and payment history. A late payment that is out of pattern with several years of on-time behaviour is viewed more favourably.
For SIC, PS LA 2006/8 and the ATO’s guidance point to your compliance and payment history, the reasons the shortfall arose, whether you voluntarily disclosed the error or the ATO found it through its own compliance work, and the extent to which ATO delay or other factors outside your control added to the amount of SIC.
The ATO’s published examples show how this plays out:
- Approved: A plumbing business owed $50,000 by a client that went into receivership could not pay its March BAS, so it contacted the ATO before the due date and entered a three-month payment plan, and the GIC was remitted because the cause was outside its control, it acted promptly and it had a strong payment history.
- Declined: A company with unpaid GST cited rising supply costs and interest rates. The ATO refused because the downturn affected businesses generally, most of whom still paid on time, and adverse cash flow from general economic conditions “will not usually qualify”.
The ATO also states that where the GIC amount is relatively low, for example $2,500 or less, a positive compliance history will strongly influence its decision.
How to Apply for Remission of GIC or SIC
Requests can be made through ATO online services, by phone or by mail, depending on who is lodging.
- Online services: Businesses, including sole traders with an ABN, can attach the relevant remission application form to a secure mail message through Online services for business or Online services for individuals and sole traders. Tax and BAS agents use Online services for agents.
- Phone: Most taxpayers can call the ATO, and agents can use the Registered Agent Phone Line. Requests over $2,500 go to a dedicated team, and some SIC requests must be made in writing.
- Mail: A completed application form can be posted to the ATO, which is the written option for individuals.
Use the correct form for each charge, as GIC and SIC have separate remission forms, and when lodging online select the topic the interest relates to, such as income tax. Set out the circumstances clearly and attach evidence that matches the cause you are claiming, such as medical certificates, police reports, court documents, financial statements or letters from an insurer or financial institution.
The ATO can also check your lodgment and payment history and the assets it knows you hold, so your request must be accurate and consistent with your records. Have a registered tax agent prepare or review it, as the evidence and how you explain the reasonable steps you took can materially affect the outcome.
What Happens After You Apply (and What Remission Doesn't Fix)
A remission decision can be full, partial or a refusal, and none of these outcomes pause the underlying debt. The ATO may ask for more evidence first, and it will write to explain any decision not to remit in full.
Review rights differ between the two charges. For GIC, you cannot object, but you can lodge a new request if key information was missing or an error was made, and judicial review in the Federal Court remains available. For SIC, you can lodge an objection if the amount left to pay is more than 20% of the shortfall, or request a review if it is 20% or less.
Lodging a remission request does not put anything on hold, so your payment obligations and any ATO payment plan carry on as normal and GIC keeps building on whatever is still owed while the ATO works through it. GIC incurred on or after 1 July 2025 also can no longer be claimed as a tax deduction (our guides on the tax deductibility of GIC and ATO interest no longer deductible explain the change), so carrying an ATO debt now costs more after tax than it used to and that belongs in any decision about remission versus financing.
If the debt itself is the real pressure point, tax debt loans can clear the principal while your tax agent works through a remission request or a payment arrangement with the ATO.
GIC vs SIC at a Glance
Conclusion
Remission of ATO interest can reduce or cancel GIC and SIC, but it does not reduce the tax debt itself, and each request is decided on its own facts, which is why it is best prepared through a registered tax agent.
If the underlying ATO debt is the bigger issue, tax debt loans are a practical option alongside that process. You are welcome to speak with a broker for a no-obligation conversation about your funding options, and our case studies show how we have helped other businesses with ATO debt.
