Remission of interest charges

We apply a general interest charge (GIC) on unpaid tax debts and shortfall interest charge (SIC) on shortfall amounts. You can ask us to remit (reduce or cancel) interest charges where it is fair and reasonable in the circumstances.

We can also initiate a reduction of interest charges for shortfall periods, for example, where you've made a voluntary disclosure or we or third parties have been responsible for delays that increase the shortfall period.

On this page

• Why we charge interest
• How we assess a request for GIC remission
• How we assess a request for SIC remission
• How to request a remission of interest
• Further avenues of review

Why we charge interest

The purpose of 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.

General interest charge

We may apply the general interest charge (GIC) if an amount of tax or some other liability remains unpaid after the date it should have been paid. This includes where:

• a tax shortfall arises as a result of an amendment of an assessment or other correction
• an instalment of tax is underestimated
• a return is lodged late.

Shortfall interest charge

The shortfall interest charge (SIC) has a lower rate than the GIC. This is because taxpayers are usually unaware of a shortfall amount until we tell them. When we tell you of a shortfall in your tax we also include an interest charge on the shortfall amount.

The shortfall is the difference between the amount of tax originally assessed (or refunds you claimed) and the amount of tax you were eventually assessed for (or credits you were entitled to).

The due date for payment of the additional tax and SIC is 21 days after the day we give you notice of the additional tax. Once the due date has passed, the higher GIC applies to any unpaid tax and SIC.

How we assess a request for GIC remission

In deciding whether to reduce or cancel the GIC, we consider factors including:

• whether there were any extenuating circumstances that caused the delay in payment
• what steps you took to relieve the effects of those circumstances
• if there are other special circumstances, such as where the payment of the full amount of GIC would result in serious financial hardship for you.

For example, we look at whether you were responsible for the delay in payment or it was outside your control. This could be due to such things as natural disasters, industrial action, the unforeseen collapse of a major debtor or the sudden ill health of key staff.

If you were responsible, we look at whether this had an unforeseen result, for example, where a soundly-based decision had unforeseen consequences.

How we assess a request for SIC remission

We use the information you provide as well as other information available to us to consider your request for remission of the SIC. We may remit all, some, or none of the interest charge.

We also initiate remission if it is clearly appropriate to do so, for example if:

• we delay the start of an examination into your tax affairs or the expected time to complete an examination is late due to our actions
• we cause periods of unreasonable delay during the course of an examination
• either of us experiences a delay in obtaining information from a third party during the examination, which is not otherwise available to you
• we delay processing your amendment request.

How to request a remission of interest

In this section

• Online services for business
• Online services for agents
• Fax or mail
• Shortfall amounts
• How we advise you of our decision

You can request a reduction or cancellation of an interest charge. In most circumstances, reduction or cancellation of GIC and SIC must be made in writing. You can write to us either:

• through Online services for business or Online services for agents (you must be registered)
• by fax or mail.

In very limited circumstances you can phone us to request a remission of SIC.

Include in your request to us:

• your full name
• your contact details
• your tax file number (TFN) or Australian business number (ABN)
• the reference number from any letter or notice advising you of our decision
• an explanation of why you think it is fair and reasonable for us to reduce or cancel your interest charges
• for GIC only, explain in detail the circumstances, including relevant dates, that led to the delay in payment and any steps you've taken to reduce the delay
• details of interest ($) amounts and dates interest was imposed if known.

Online services for business

Request a reduction or cancellation of an interest charge in Online services for business using Secure mail. Select the topic and subject of your message from the list below.

Online services for agents

Tax professionals can request a reduction or cancellation of an interest charge for their clients in Online services for agents using Practice mail. Select the topic and subject of your message from the list below.

Fax or mail

Send your request for a reduction or cancellation of an interest charge for Income tax liabilities and GST by either:

• Fax 1300 139 045
• Post
  Australian Taxation Office
  PO Box 327
  ALBURY  NSW  2640

Send your request for a reduction or cancellation of an interest charge for Fuel schemes and non-BAS claimants of wine equalisation tax (WET) and fuel tax credits by post to:

Australian Taxation Office
PO Box 3007
PENRITH  NSW  2740

Shortfall amounts

You may request a reduction or cancellation of SIC by phone in the case of the following exceptions:

• SIC was calculated on an amount larger than your amendment assessment (PAYG ITW credit/s were not included to reduce the shortfall).
• SIC was calculated after you paid tax (paid before your notice was issued).
• We took longer than the service standard time to issue your amendment and the SIC accrued.

How we advise you of our decision

If we decide not to remit the interest charge in full we send you a letter explaining why not.

Further avenues of review

In this section

• General interest charge
• Shortfall interest charge

General interest charge

The remission of GIC is not a reviewable objection decision. This means you don't have the right to lodge an objection with us or have the decision reviewed by the Administrative Appeal Tribunal (AAT).

However, you may seek an independent external review of the decision in the Federal Court or Federal Circuit Court under the Administrative Decisions (Judicial Review) Act 1977.

Shortfall interest charge

In all circumstances except one, you can request a review of the SIC remission decision. The exception is where, after our decision on your first request, the amount you still have to pay is more than 20% of the shortfall itself. In this situation you need to use the objection process to disagree with our decision.

See PS LA 2006/8 Remission of shortfall interest charge and general interest charge for shortfall periods.