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  • Shortfall interest charge

    If your tax return is amended and your tax liability increases, there is a tax shortfall. We apply interest to this shortfall amount for the period between when it would have been due and when the assessment is corrected.

    We apply a lower-rate interest called shortfall interest charge (SIC) rather than general interest charge (GIC). This is because taxpayers are usually unaware of a shortfall amount until they receive an amended assessment.

    The SIC rate is updated quarterly based on a formula set by law.

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    How SIC is applied

    SIC applies to amended assessments for:

    • income tax for the 2004–05 and later income years
    • petroleum resource rent tax for the 2006–07 and later financial years.

    SIC is applied on a daily compounding basis to the shortfall amount.

    Payment

    The due date for payment of the extra tax and SIC is 21 days after the day we issue the notice of the amended assessment. Once the due date has passed, GIC will apply automatically to any unpaid tax and SIC.

    Effect on income tax

    You can claim a tax deduction for SIC in the year that you received the notice of assessment that includes the SIC amount.

    If we remit SIC, you must include the remitted SIC amount as interest income in your tax return in the year that we granted the remission.

    If you make an amendment that reduces an earlier amendment, you must also include the amount of SIC that was reduced.

    Remission of interest for shortfall periods

    You can ask for the SIC amount (and any related GIC) to be remitted in full or part if there are extenuating circumstances, for example, if we contributed to an error that led to a shortfall, or if the shortfall amount is paid before the notice of amended assessment is issued.

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    Last modified: 09 Apr 2019QC 33406