ATO Tax Debt Just Got More Expensive

Paying ATO Interest? Here’s What’s Changing

If you’re a business owner with unpaid tax debt or an ATO payment plan in place, there’s an important change coming that could impact your bottom line.

What’s Changing?

From 1 July 2025, the ATO will remove the tax deduction on interest charges applied to tax debts. This applies to:

General Interest Charge (GIC)
Shortfall Interest Charge (SIC)

Right now, these interest charges—currently sitting at 11.17%—can be claimed as a tax deduction. But once this change takes effect, that deduction is gone, making your tax debt more expensive to carry.

What This Means for Your Business

If you’re using an ATO payment plan to manage tax debt, you could soon be paying:

More in interest than you expected
Without any tax benefit to offset the cost

For example, if you have $100,000 in tax debt, you’re paying over $11,000 a year in interest. From July 1, you won’t be able to claim that as a deduction, turning this into one of the most expensive ways to manage debt.

Who Is Most Affected?

Small and medium business owners with outstanding tax debt
Businesses on long-term payment plans with the ATO
Anyone planning to stretch payments past July 2025

What Are Your Options?

The good news? You don’t have to stick with an ATO payment plan.

We help business owners:

Switch to funding with tax-deductible interest (still claimable at tax time)
Access lower rates than the ATO’s 11.17%
Get longer terms to spread repayments and improve cash flow

What Should You Do Now?

Review your current tax debt or payment plan
Speak to your accountant about this upcoming change
Explore funding options that may save you money in the long run

If you’d like us to run some numbers or discuss your options, get in touch with our team today.

We’re here to help you stay ahead of the change and keep your business moving forward.