Changes to GIC Deductions Pass Parliament

On 26 March 2025, Parliament passed amendments that will deny taxpayers the ability to claim deductions for General Interest Charge (GIC) and Shortfall Interest Charge (SIC) starting 1 July 2025. This change is part of the Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024, aimed at encouraging businesses and individuals to self-assess and pay taxes on time.

While the government argues the move will level the playing field and incentivise timely compliance, it does raise concerns.  Denying these deductions could put extra financial pressure on businesses, especially small businesses already struggling with cash flow.

The change also introduces a longer period for the ATO to notify taxpayers of decisions regarding refunds and BAS verifications, from 14 to 30 days, to help combat fraud.

As the changes take effect this July, it is crucial that all businesses review their cashflows, especially where they are relying upon ATO payment plans and getting tax deductions for interest charges.  Alternative financing options may now need to be considered.

Cashflow forecasting is something we can assist with so please reach out to us if this is of interest to you or your business.

If you have any questions in relation to the matters discussed in this blog, please get in touch with us.