• Remission of interest charges

    We charge interest on unpaid tax debts and shortfall amounts – the latter being the difference between the amount of tax you were originally assessed for (or refunds you claimed) and the amount of tax you were eventually assessed for (or credits you were entitled to).

    If you are dissatisfied with an interest charge you can ask us to remit it. We can generally 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 where, for example, you've made a voluntary disclosure or we or third parties have been responsible for delays that increase the shortfall period.

    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 on which it should have been paid, including 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 advise them of it. When we tell you of a shortfall in your tax we also include an interest charge on the shortfall amount.

    The due date for payment of the additional tax and for the SIC is 21 days after the day we give you the 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 remission

    GIC

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

    • whether there were any extenuating circumstances that caused the delay in payment
    • what steps you took to relieve the effects of those circumstances
    • whether 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 (due to such things as natural disasters, industrial action, the unforeseen collapse of a major debtor or the sudden ill health of key personnel).

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

    SIC

    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 readily apparent that it is 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 exceeded due to our actions
    • we cause periods of unreasonable delay during the course of an examination
    • during an examination either of us experiences a delay in obtaining information from a third party and this information is not otherwise available to you
    • we delay processing your amendment request.

    How to request a remission of interest

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

    • through the online Business or Tax Agent Portals (you must be registered)
    • by fax or mail to the following addresses:

    For interest charged in relation to:

    Fax

    Post

    Income tax liabilities and GST

    1300 139 045

    Australian Taxation Office
    PO Box 327
    ALBURY  NSW  2640

    Fuel schemes and non-BAS claimants of wine equalisation tax (WET) and fuel tax credits

    N/A

    Australian Taxation Office
    PO Box 3007
    PENRITH NSW 2740

    In your request to us, include:

    • your full name
    • the name, postal address and daytime phone number (if convenient) of a person we can contact about the request
    • 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 – if it is a general interest charge, explain in detail the circumstances that led to the delay in payment, including any steps you've taken to reduce the delay.

    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

    General interest charge

    You don't have a formal right to ask us to review our decision in relation to remission of GIC. 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 remission decision. The exception is where, after our decision, 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.

    Next steps:

    See also:

    Last modified: 04 Nov 2015QC 33808