Shortfall interest charge - fact sheet

This fact sheet explains what the shortfall interest charge (SIC) is, how it is applied and how it is calculated. It also explains when and how you can apply to have the SIC reduced.

Shortfall interest charge can be downloaded in Portable Document Format (PDF, NAT 14609, 83KB).

To order a printed copy of this fact sheet, please take note of the NAT number -NAT 14609 - and select Online publications ordering service or phone the Publications Distribution Service on 1300 720 092. The Publications Distribution Service operates from 8.00am to 6.00pm, Monday to Friday.

SIC applies to amendments of the 2005 assessment and later assessments where there is more tax payable (a tax shortfall).

What is the shortfall interest charge?

Australia's tax system is based on you lodging an income tax return in which you tell us about your income and provide other information.

We usually accept the information you provide in your income tax return, although we may make some adjustments, for example where a mistake has been made in adding up amounts. Once your income tax return has been processed, we issue you with a notice of assessment.

After you receive your notice of assessment you may realise you have made a mistake in your income tax return and alert us, or a review by us may find errors in your original income tax return. This may result in an increase or decrease in the tax payable. Where there is an increase in the tax payable, this is called a 'tax shortfall'.

We will tell you of any tax shortfall in a notice of amended assessment.

The notice of amended assessment will include an interest charge imposed on the tax shortfall. This is the SIC. It applies to the shortfall amount from the due date of the original assessment to the day before the issue date of the notice of amended assessment.

We will issue the notice of amended assessment including the associated SIC, allowing three days for delivery of the notice to you. The amounts will be due for payment 21  days later.

A higher interest charge, called the general interest charge (GIC), can apply to any amount not paid or paid late from your original notice of assessment. If the amended assessment or shortfall amount and the SIC are not paid by the due date, GIC will be applied to those amounts.