The Shortfall Interest Charge (SIC) is what the ATO charges when an amended assessment shows your business owed tax it didn’t previously know about. It compounds daily and currently runs at 7.43% p.a. (0.02035616% a day) for the July–September 2026 quarter, set out in section 280-105 of Schedule 1 to the Taxation Administration Act 1953. One line sums up the difference from its better-known cousin: SIC applies to a shortfall you didn’t know existed, while the General Interest Charge (GIC) applies to tax you did know about and simply paid late.
If an SIC notice has just landed in your inbox, it almost certainly followed an amended assessment: the kind the ATO issues after an audit, a data-matching mismatch, or a correction you made yourself and told them about. SIC is interest, not a penalty, even though both interest and penalties can turn up on the same bill together. The rate resets every quarter and compounds daily, so a shortfall sitting unpaid for even a few months can grow more than most business owners expect. And since 1 July 2025, SIC is no longer tax-deductible, which raises the real after-tax cost of allowing SIC to accumulate.
This page covers how SIC is calculated, when it’s due, when the ATO will actually reduce it, and how a tax debt loan can stop it accruing today rather than next quarter.
Key Takeaways
- Current SIC rate: 7.43% p.a. (0.02035616% daily) for July–September 2026; GIC currently sits higher, at 11.43% p.a.
- From 1 July 2025, neither SIC nor GIC is tax-deductible, no matter which income year the underlying debt relates to (interest accrued before that date keeps its deduction).
- SIC applies to a shortfall you didn't know about; GIC applies to a known debt paid late, and a debt can move from one to the other.
- Payment is due 21 days from the date on the amended assessment notice.
- Remission is possible, but only in limited circumstances, and a partial reduction is far more common than a full waiver.
What Is the ATO Shortfall Interest Charge?
The Shortfall Interest Charge (SIC) is a type of interest imposed by the ATO when an individual or business is found to have paid less tax than they should have for a particular income year. This often occurs when the ATO issues an amended tax assessment that increases a taxpayer’s liability, revealing a tax shortfall.
It’s set out in section 280-105 of Schedule 1 to the Taxation Administration Act 1953, and it runs from the day your original tax was due right up to the day before the amended assessment issues, not from the date you’re actually notified. SIC is also separate from any penalty for a false or misleading statement; the two can be applied together, but each is calculated, and can be remitted, independently of the other. And it isn’t limited to income tax: the ATO applies it across income tax, GST, PAYG withholding and FBT shortfalls, so a single business can pick up notices from more than one type of amended assessment at once.
Why Did I Receive an SIC Notice From the ATO?
You may receive a Shortfall Interest Charge notice if the ATO determines that you owe more tax than you originally declared and paid. This could happen due to:
- A tax audit or review
- Voluntary disclosure of omitted income or incorrect claims
- A correction of an error in your tax return
- Disallowed deductions or adjustments to capital gains
- The ATO’s own data-matching systems flagging a mismatch between what you reported and what banks, employers or other agencies told them
In such cases, the ATO will issue an amended assessment, and the SIC is calculated from the original due date of the tax payment to the date of the amendment. Either way, the notice usually turns up alongside the amended assessment itself rather than as a separate letter later on, and if you’ve received one, it’s worth remembering this is usually just a genuine reporting error, not any wrongdoing on your part. The ATO’s systems catch far more honest mistakes than deliberate ones.
SIC vs GIC: When Does the ATO Apply Each?
What actually matters here is timing and knowledge, not how big the debt is: SIC applies when an amended assessment reveals a shortfall you genuinely didn’t know about, so the ATO’s effectively backdating a debt you weren’t aware existed, while GIC applies to a liability you did know about and simply paid late, whether that’s a lodged BAS, an income tax return, or an existing SIC-inclusive bill you missed the deadline for.
That second point matters more than most people realise: a debt doesn’t stay under SIC forever. Once the 21-day payment window on an amended assessment lapses, any unpaid balance stops accruing SIC and starts accruing GIC instead, at a noticeably higher rate.
Is SIC Tax-Deductible? The 1 July 2025 Rule Change
which income year the underlying debt relates to. It doesn’t matter if the shortfall itself goes back to the 2019 or 2022 income year; if the interest accrues after 1 July 2025, it’s non-deductible.
Interest that accrued before that date keeps its deduction; the change applies only to interest accruing from 1 July 2025 onward. But for any SIC or GIC sitting unpaid past that point, the practical effect is real: a dollar of SIC now costs a dollar, not a discounted after-tax amount, which quietly raises the true cost of leaving a shortfall to compound.
Current ATO guidance doesn’t set out exceptions to this rule. If you think a transitional or hardship exception might apply to your specific situation, that’s a conversation to have with a tax adviser before you rely on it for a tax position; this page is general information, not advice tailored to your circumstances.
How the ATO Calculates SIC
SIC is calculated using the 90-day Bank Accepted Bill rate plus a 3% uplift, published as both an annual and a daily rate each quarter. For July–September 2026, that works out to 7.43% p.a., or 0.02035616% per day. Because the base rate moves with market conditions, the SIC rate moves with it; it isn’t fixed from one quarter to the next.
The charge runs from the day your original tax was due to the day before your amended assessment issues, and it compounds daily over that period rather than applying as one flat percentage. If a shortfall spans more than one quarter, the ATO doesn’t apply a single blended rate for the whole period: each quarter is calculated separately, at whatever rate applied at the time. That’s worth knowing if you’re trying to estimate a bill that’s been sitting unresolved for six months or more, since a rough calculation using today’s rate alone can look quite different from the actual figure on your notice.
Sample ATO SIC Computation
Here’s how that plays out in practice, using the current 7.43% p.a. rate. A $10,000 shortfall left outstanding for 182 days (roughly six months) accrues approximately $370.48 in SIC. Scale the debt up, or extend the period, and the number grows quickly, as the table below shows.
| Shortfall Amount | Period Outstanding | Approximate SIC |
|---|---|---|
| $10,000 | 182 days | ~$370.48 |
| $50,000 | 182 days | ~$1,852 |
| $10,000 | 365 days | ~$743 |
These figures are illustrative, calculated at the current July–September 2026 rate, and they’ll shift with the ATO’s next quarterly reset. For an exact figure on your own situation, particularly one spanning more than one quarter, use the ATO’s own SIC calculator or check with a tax adviser rather than relying on a rough estimate.
Due Date for ATO SIC
The due date of any unpaid tax plus the SIC is 21 days after the ATO issues the notice of amended assessment, not 21 days from when you happen to open the letter. Once 21 days have passed and the amount due is still not paid, the General Interest Charge (GIC) automatically applies to the unpaid tax and the SIC instead, currently at 11.43% p.a., roughly 54% higher than the current SIC rate.
That 21-day deadline is fixed. It won’t move just because you’re waiting on a payment plan to be approved, so it’s worth acting on the notice as soon as it arrives rather than after an arrangement has already been agreed.
Shortfall Interest Charge vs General Interest Charge
How is SIC different from GIC? While both are types of interest charges used by the ATO to penalise late payments or tax understatements, they differ in key areas.
Side by side, the two current rates make the stakes fairly clear: SIC sits at 7.43% p.a. (the 90-day Bank Accepted Bill rate plus a 3% uplift) for July–September 2026, while GIC runs at 11.43% p.a. (the same base rate plus a 7% uplift), a gap of exactly 4.0 percentage points. Both charges compound daily, and both lost their tax deductibility from 1 July 2025.
| Charge | Trigger | Current Rate | Formula | Deductible? |
|---|---|---|---|---|
| SIC | Previously unknown shortfall from an amended assessment | 7.43% p.a. | 90-day BAB rate + 3% | No, from 1 Jul 2025 |
| GIC | Known liability paid late | 11.43% p.a. | 90-day BAB rate + 7% | No, from 1 Jul 2025 |
For a closer look at how GIC works on its own, see our ATO GIC explained guide.
Can SIC Be Waived or Reduced by the ATO?
In certain circumstances, the ATO may remit or reduce the SIC if it believes that the taxpayer has a valid reason. These are usually assessed on a case-by-case basis: remission is discretionary, not automatic, so the ATO won’t waive it just because paying is inconvenient or the amount feels unfair. That said, it’s genuinely possible in the right circumstances, and it’s worth applying for if your situation fits.
Grounds for Remission
Some of the reasons the ATO may consider remitting the SIC include:
- You made a voluntary disclosure before being contacted by the ATO
- You can demonstrate that reasonable care was taken
- You acted promptly to rectify the error
- Serious financial hardship or personal circumstances affected compliance
- A processing delay on the ATO’s own end, or reliance on incorrect advice you received directly from the ATO
To request a remission, you will need to contact the ATO and submit a formal request, including relevant documentation and an explanation of the circumstances. More broadly, these grounds tend to centre on delays outside your control rather than convenience: deliberate underreporting, or simply not getting around to lodging on time, isn’t a valid ground. Partial remission, where the ATO reduces rather than fully waives the charge, is also far more common than a complete waiver, so it’s worth setting your expectations accordingly before you apply.
Paying the SIC Directly
The SIC will be included in your amended notice of assessment. You can pay it using standard methods such as direct debit, credit card, or ATO online services via myGov or the business portal. Paying it in full by the due date is the simplest way to stop further accrual: a partial payment only slows the daily accrual on whatever balance remains outstanding, it doesn’t pause it. Because the interest compounds daily and, since 1 July 2025, isn’t deductible, funding the full payment, through a short-term loan for instance, can end up cheaper overall than letting the balance sit and compound while you wait on cash flow.
Payment Plans
If you cannot pay your tax debt, including the SIC, upfront, the ATO may offer you a payment arrangement. These arrangements allow you to pay in instalments over time, though GIC may apply to the outstanding balance. An arrangement like this doesn’t automatically remit the SIC already applied to the account, and approval also depends on your compliance history with the ATO, so it isn’t guaranteed.
How to Pay Off Tax Debt and Manage ATO SIC
Dealing with unexpected charges can be stressful, especially when it adds to an already significant tax bill. Fortunately, there are several ways to manage the debt and minimise financial stress: paying the SIC directly, negotiating an ATO payment plan, or using external finance to clear the debt in one hit. Each has trade-offs, and none of them is automatically the right answer for every business.
What’s changed since 1 July 2025 is that the comparison isn’t just about the headline SIC or GIC rate anymore: it’s about the fact that ongoing interest on any of these paths is no longer tax-deductible. That makes the total cost of a payment plan, where SIC and GIC can keep accruing over months, worth weighing against the cost of finance that clears the debt immediately and stops the clock. The real question isn’t only “what’s the interest rate”, but “how long will this debt keep compounding, and is there a faster way to stop it?”
For those looking to avoid high ongoing interest from the ATO, a tax debt loan is a financing option that pays off the ATO debt in one lump sum, potentially saving money on GIC and improving cash flow, covered in more detail below.
Managing SIC with a Tax Debt Loan
Facing a tax shortfall and a resulting SIC can put a strain on your cash flow, especially if the total debt is substantial. If paying the full amount upfront isn’t realistic, many Australians turn to tax debt loans as a practical solution.
A tax debt loan clears an ATO shortfall in full, which stops SIC accruing immediately rather than waiting on a payment plan to be approved or a return to be reassessed. Dark Horse Financial works with a lender panel of 100+ banks, non-bank lenders and private financiers, and some unsecured products can be approved in as fast as 24–48 hours, which matters given the ATO’s 21-day payment window. Funding across the panel ranges from $10,000 up to $50 million, covering everything from a small shortfall to a significant multi-quarter debt.
The deductibility change adds weight to this. Since SIC and GIC are no longer tax-deductible from 1 July 2025, every month a shortfall sits unpaid costs more in real terms than it used to. We won’t tell you we’ve got the lowest rate on the panel: what we can offer is breadth of options and speed of approval, so you’re not stuck waiting while interest compounds. Explore your tax debt loan options.
FAQ
SIC is the ATO’s interest charge on a tax shortfall revealed by an amended assessment: a debt the ATO says you owed but weren’t previously aware of. It compounds daily and currently runs at 7.43% p.a. for the July–September 2026 quarter.
No. From 1 July 2025, neither SIC nor GIC is tax-deductible, and that applies no matter which income year the underlying debt relates to. Interest accrued before that date keeps its deduction.
SIC applies to a shortfall you didn’t previously know about, revealed by an amended assessment. GIC applies to a known liability you paid late. Right now GIC’s rate (11.43% p.a.) is higher than SIC’s (7.43% p.a.), a gap of 4.0 percentage points.
SIC equals the 90-day Bank Accepted Bill rate plus a 3% uplift, compounding daily. For the July–September 2026 quarter, that comes to 7.43% p.a., or 0.02035616% per day, and it resets every quarter as the base rate moves.
Only in limited circumstances, such as a delay caused by the ATO itself, a natural disaster, or reliance on incorrect ATO advice. Remission is discretionary rather than automatic, and a partial reduction is far more common than a full waiver.
Payment is due 21 days from the date on the amended assessment notice. Miss that window and the unpaid balance starts accruing the General Interest Charge instead, currently a noticeably higher 11.43% p.a.
Conclusion
Two numbers are worth carrying away from all of this: 7.43% p.a., the current SIC rate compounding daily on any shortfall you’re carrying, and 1 July 2025, the date interest like this stopped being tax-deductible altogether. Together they mean an unpaid SIC bill costs more, in real terms, than it did a couple of years ago, and it keeps costing more the longer it sits.
If you’re weighing up how to clear an ATO shortfall, talk to Dark Horse Financial about your tax debt loan options. With a panel of 100+ lenders and approval on some products in as little as 24–48 hours, we can help you stop the interest clock rather than watch it run.
More To Explore
Ready to deal with your ATO debt directly? Explore our tax debt loan options, or read our companion guide, ATO GIC explained, if your debt has already moved past the SIC stage.
Sources and Methodology
- Australian Taxation Office, Shortfall interest charge (SIC) rates, ato.gov.au (updated 5 June 2026)
- Australian Taxation Office, General interest charge (GIC) rates, ato.gov.au
- Taxation Administration Act 1953 (Cth), Schedule 1, section 280-105
- Australian Taxation Office, Changes to deductibility of interest on ATO debts, ato.gov.au
The information provided in this article is for general informational purposes only and does not constitute tax, legal, or financial advice. It is not intended to replace professional consultation with a qualified tax agent, accountant, or legal advisor. Each individual’s or business’s circumstances are unique, and specific advice should be sought to address your particular situation.
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