Dear Valued Clients and Subscribers,
If your business has an ATO payment plan or outstanding debt, a recent legislative change will soon impact how you manage it.
From 1 July 2025, businesses will no longer be able to claim a tax deduction for General Interest Charges (GIC) or Shortfall Interest Charges (SIC) on ATO debts.
This change will directly affect cash flow and overall tax strategy – especially for those using ATO payment plans as a form of short-term finance.
What this means for You
- The cost of tax debt is going up – GIC and SIC will no longer reduce your taxable income
- Payment plans may become less attractive as the interest burden increases
- Cash flow planning becomes more critical with interest no longer deductible
- Businesses relying on ATO plans should reassess their strategy urgently
In recent months, the ATO has been applying pressure for faster repayments – often under strict conditions that can stretch business cash reserves. This legislative change will only increase the financial impact of carrying tax debt.
What You Should Do Now
With around four weeks remaining before the changes take effect, we strongly recommend:
- Paying off any existing ATO debts where possible
- Reassessing ATO payment plans that extend beyond 1 July 2025
- Exploring other funding options where interest remains tax deductible
- Speaking with your accountant about your position and the best way forward
Learn more directly from the ATO:
Denying deductions for ATO interest charges https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/deny-deductions-for-ato-interest-charges
If you would like to discuss how this change affects your business or review your ATO debt strategy, please contact your Stable Financial accountant, or call us on +61 3 9629 3023.
Warmest regards,
Adam and the Stable Team.