Remission of interest requests

With a steep rise in interest rates, a cost-of-living crisis, escalating tensions abroad, and having just experienced a pandemic, many small businesses have done it tough in recent times.

With a steep rise in interest rates, a cost-of-living crisis, escalating tensions abroad, and having just experienced a pandemic, many small businesses have done it tough in recent times.

As a result, an escalating tax debt may be getting difficult to manage, despite your best efforts to get on top of it. In fact, it may feel like every payment you make just goes towards paying the interest, rather than your primary debt.

So, what can be done?

Background

The ATO applies two types of interest charges:

  • The ATO applies general interest charge (GIC) on unpaid tax debts, and
  • Shortfall interest charge (SIC) on shortfall amounts.

The ATO’s reasoning for charging interest is to ensure that:

  • Taxpayers who complete their tax returns correctly and pay their tax on time are not worse off than taxpayers who lodge incorrect returns and pay less tax than they should (even if this is by mistake)
  • Government revenue is not disadvantaged by taxpayers who don’t pay their tax on time.

Request for remission

In certain circumstances, the ATO may remit (reduce) GIC or SIC upon request.

In deciding whether to remit GIC or SIC, the ATO considers the following factors:

  • The existence of extenuating circumstances that caused the delay in payment, and
  • The steps taken to relieve the effects of those circumstances.

The ATO may ask for documents to support the request.

They may remit all, some or none of the interest charge.

In most cases, remission of GIC must be made in writing.

Tips when making a remission request.

  • If the delay in payment was not your fault, explain what happened that was outside of your control, for example, a natural disaster such as fire or flood, and how this affected your ability to pay.
  • Outline the steps you are taking to address the circumstances, for example, refinancing or selling assets.
  • If the delay was caused by you, explain what has been done to reduce the effect of the circumstance that caused this delay, for example, engaging an accountant to assist with budgeting, and why it would be “fair and reasonable” to remit the interest charges, for example, you otherwise have a good compliance and lodgement history.
  • Ensure lodgements are up to date prior to making the request.
  • Work with your tax agent to come up with a realistic plan for reducing your primary debt and consider providing this plan as part of the request.

Cathro & Partners are experts in providing insolvency and restructuring services that help to create and preserve business value. The firm specialises in restructuring, turnaround, personal and corporate insolvency, safe harbour, secured enforcement services, government advisory services and pre-lending services.

Recent Articles

As FY25 comes to a close, it presents an opportunity to reflect on the past 12 months—on earlier forecasts, actual outcomes, and the broader conditions shaping the year ahead. Inflation and labour shortages have remained key challenges across the economy. According to ASIC data, these pressures have had a marked

Building a successful practice demands more than technical skill—it calls for relentless commitment, strategic mindset shifts, and the courage to delegate. In this episode of The Cut, host Andrew Blundell sits down with Nick Hitchens, founder of Hitch Advisory, to trace his rise from managing distressed pub sales to advising

Commercial Property Finance: A renewed sense of optimism After several years of turbulence, the commercial property finance market has entered 2025 with renewed, if cautious, optimism. The economic headwinds of recent years, including rising interest rates, global instability and shifts in asset class performance, prompted many investors and developers to