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  • ATO interest – calculation and reporting

    This information may be useful if you need to manually calculate your ATO interest deductions or income, or you need to adjust interest amounts when using the ATO interest pre-fill data when preparing your tax return.

    The Year to date interest summary report available to tax agents is not intended to be used for completing income tax returns (see Recurring data issues – calculating ATO interest.)

    It is important that you check your statement of account to ensure the accuracy of the pre-fill data before lodging your tax return.

    ATO interest – reporting

    We provide ATO interest data to individual taxpayers for the 2014 and later income years. Interest data is pre-filled in the relevant income tax return labels when you prepare your return using myTax.

    We also provide this data to tax agents via the Pre-filling report and the practitioner lodgment service. We will display a message in the Pre-filling report advising if a client has ATO interest for 2013 and prior income years.

    Interest data is sourced from the income tax, fringe benefit tax (from 2018) and the integrated client accounts (ICA). The following interest types are reported:

    • General interest charge (GIC)
    • Shortfall interest charge (SIC)
    • Late payment interest (LPI)
    • Interest on early payment (IEP)
    • Interest on overpayment (IOP)
    • Delayed refund interest (DRI).

    We report on interest that:

    • may be claimed as a deduction (GIC, SIC, LPI)
    • must be claimed as assessable income (GIC, SIC or LPI remissions or recoupments)
    • must be claimed as interest paid by the ATO (IOP, IEP, DRI).

    In 2016, we introduced a new way of capturing and reporting GIC, SIC and LPI. This reporting method applies to individual taxpayers only – see, ATO interest – calculation.

    Individual taxpayers can choose to report ATO interest deductions and income using this new method or they can choose to calculate the interest amounts manually – see Manually calculating ATO interest.

    We changed the individual income tax return labels you use to report ATO interest as follows:

    • For 2017 and prior income years  
      • interest deductions are reported at item D10 Cost of managing affairs
      • assessable interest is reported at item 24Y Other income
      • interest paid by the ATO (that is, IOP, IEP, DRI) is reported at item 10 Gross interest.
       
    • For 2018 and later income years  
      • interest deductions are reported at item D10N Cost of managing tax affairs – Interest charged by the ATO
      • assessable interest is reported at item 24X Other income – Category 2 (ATO interest)
      • interest paid by the ATO is reported at item 10 Gross interest.
       

    Recurring data issues

    You should check your statements of account and other source documents to ensure the pre-fill data reflects your specific circumstance before lodging your tax return.

    Interest calculations will not capture an individual taxpayer's specific circumstances in the following situations:

    • Recoupments of interest charged
      When we report interest remission and credit adjustments as assessable income we assume you have claimed a deduction for interest that we imposed. If you have not claimed a deduction and the period for requesting an amendment of your return to claim the deduction has lapsed, you don't have to claim the interest income. You may need to adjust the interest totals we have provided.
    • Change in residency status
      We report interest paid by the ATO on the basis of your residency status when the interest data is extracted from your account at the end of the financial year. If you were a non-resident at the date of extraction, no interest paid data will be provided.
      If you were a non-resident when we paid you interest, then we should have withheld tax from that payment. If this is the case you don't have to declare this interest in your income tax return. If tax was not withheld, you will need to declare the interest as income at item 10 Gross interest.
      You may need to adjust the interest totals we have provided to remove or add the interest paid by the ATO. See Examples 5 and 6.
    • Movement of transactions across ICA
      We move transactions across accounts to undertake a number of administrative actions (for example, to isolate pre and post-bankruptcy transactions; to isolate amounts that are in dispute). When a transaction is moved between accounts, the process date is reported as the date the transaction was moved. This means interest previously reported may be reported again in a later pre-fill report. We have revised our business rules to prevent this duplication in the report for 2018 and later years. You may need to adjust the interest totals we provide for the 2017 and prior years if your accounts contain moved transactions.

    ATO interest – calculation

    For the 2015 and prior income years, we use the effective date and processed date to capture separate interest totals for interest deductions, assessable interest and interest paid by the ATO.

    Non-individual taxpayers will need to continue using these calculation rules for all income years.

    For the 2016 and later income years, we capture all interest transactions in the pre-fill totals for individual taxpayers using one date – the processed date. We also report either a net deduction or a net assessable interest amount instead of a separate total for these interest categories. Interest is reported as follows:

    • net interest deductions at item D10 or D10N (where the interest imposed exceeds the interest income), or
    • net assessable interest at item 24Y or 24X (where the interest income exceeds the interest imposed), and
    • interest paid by the ATO at item 10.

    Where the net balance of interest calculations is nil, no interest will be reported. Nor will we provide a message that there is any interest.

    Individual taxpayers don't have to rely on the pre-fill interest amounts. They can use the previous method of calculation – see Manually calculating ATO interest.

    Transitional year adjustments

    This only impacts the calculation of pre-fill interest for the 2016 income tax year.

    The 2015 Pre-filling report was changed to a static report on 9 November 2015 to cater for the introduction of the new reporting method. This means:

    • the debit interest transactions processed on or after 9 November 2015 with an effective date of 30 June 2015 or earlier will be included in the interest totals for the 2016 pre-fill report
    • the debit interest transactions processed on or after 1 July 2015 but before 9 November 2015 with an effective date of 30 June 2015 or earlier may be captured in the interest totals in several pre-fill reports – the 2016 and earlier year reports – depending on when interest was incurred.

    If you lodged your 2015 tax return before 9 November 2015 using ATO pre-fill data, you may need to adjust the 2016 pre-fill interest figures (see Example 4).

    The following may assist you to determine if adjustments will be needed:

    • Did you have ATO interest in 2015?  
      • If no, no adjustment to 2016 data is needed.
       
    • Did you lodge your 2014-15 return using pre-fill data before 9 November 2015?  
      • Adjust 2016 pre-fill data (see note 1) by any debit interest transaction with  
        • process date between 1 July 2015 and the date you lodged, and
        • effective date between 1 July 2014 and 30 June 2015.
         
       
    • Did you lodge your 2014-15 return using pre-filled figures after 9 November 2015?  
      • Adjust 2016 pre-fill data (see note 1) by any debit interest transaction with  
        • process date between 1 July 2015 and 9 November
        • effective date between 1 July 2014 and 30 June 2015.
         
       
    • Did you lodge your 2014-15 return using non-prefilled figures?
    • Manual calculation method required.

    1. An adjustment will be needed if the same debit interest transaction is captured in the 2015 and 2016 interest totals. This is done by reducing the 2016 deductions claimed – that is, increase 24Y or decrease D10 by the amount of the duplicated transaction. Adjustments to credit transactions are not needed.

    How the new reporting process works – examples

    Example 1: Net amount of ATO interest is nil

    Chris has an outstanding debt with us and was charged $1,200 GIC in the period 1 July 2015 to 31 January 2016. Chris paid his debt and requested leniency with the charges. A full remission was granted on 31 January 2016. In this case, Chris has a $1,200 deductible interest expense and $1,200 assessable interest income (due to the GIC remission). Under the new approach, we will not provide pre-fill information as the net balance of the interest deductions and interest income is nil.

    Under the legislative rules, Chris would claim a deduction expense of $1,200 at label D10 and include interest income of $1,200 at label 24Y in the supplementary return. Under the new reporting approach, he will not declare ATO interest at these labels.

    End of example

    Example 2: Net amount of deductible interest

    Jenny has an outstanding debt with us and was charged $2,300 GIC in the period 1 July 2015 to 30 June 2016. There were GIC remissions of $56 in this period. Jenny lodged a credit amendment for the 2014 income year in the same period and this reduced the debt payable. The GIC debt was also reduced by $505. In this case, Jenny has a $2,300 deductible interest expense and $561 assessable interest income (due to the GIC remission and credit reduction). Under the new approach, we will report a $1,739 net deductible interest expense.

    Under the legislative rules, Jenny would claim a deduction expense of $2,300 at label D10 and include interest income of $561 at label 24Y in the supplementary return. Under the new reporting approach, Jenny will declare $1,739 at label D10.

    End of example

    Example 3: Net amount of assessable interest income

    John has an outstanding debt with us relating to the 2014 income year and was charged:

    • $1,265 GIC in the period 1 July 2015 to 30 June 2016
    • $981 GIC for the period 1 July 2014 to 30 June 2015.

    John lodged a credit amendment for the 2014 income year on 30 September 2015 which resulted in a refund. The GIC charged in the 2015 and 2016 income years was subsequently reduced to nil. In this case, John has a $1,265 deductible interest expense and $2,246 assessable interest income (due to the GIC adjustments in the 2016 income year). Under the new approach, we will report $981 net assessable interest (John would have claimed a $981 deduction in his 2015 tax return.)

    Under the legislative rules, John would claim a deduction expense of $1,265 at label D10 and include interest income of $2,246 at label 24Y in the supplementary return. Under the new reporting approach, John will declare $981 at label 24Y.

    End of example

    Example 4: Transitional year calculations – 2016 tax return only

    Eva has an outstanding debt with us relating to the 2014 income year:

    • $435 GIC was processed in the period 1 July 2015 to 30 June 2016 (this includes the $45 and $53 mentioned below)
    • $550 GIC was incurred in the period 1 July 2014 to 30 June 2015 (this includes the $45 mentioned below)  
      • $45 processed 7 July 2015 with effective date of 30 June 2015 (end of year GIC calculation
      • $53 processed 10 November 2015 with effective date prior to 30 June 2015 (this amount will be included in the calculation of interest in 2016 only).
       

    Eva lodged her 2015 tax return on 30 August 2015 using ATO pre-fill data and declared a deductible expense of $505 ($550 − $45). She will need to consider whether to amend this return to declare the $53 imposed on her account after lodging the 2015 return, if she uses the legislative rules to calculate her entitlements.

    Under the new 2016 approach we will report $435 net deductible interest. Eva will need to adjust this total for the $45 claimed as a deduction in the 2015 return.

    Under the legislative rules, Eva is entitled to claim a deduction expense of $337 ($435 − $45 − $53) at label D10 in her 2016 tax return. Under the new reporting approach, Eva will declare $390 at label D10. She will not need to amend her 2015 tax return to claim the $53 processed in November 2016 as the new process results in the deduction being claimed in the later year.

    End of example

    Example 5: part year residency – taxpayer resides in Australia

    Steven returned to Australia on 30 October 2018 and updated his address with the ATO.

    The 2019 income year pre-fill interest data included $125 IOP paid to Steven by the ATO on 10 August 2018 from which tax was withheld. As tax has already been paid, the IOP doesn't have to be declared. When Steven lodged his return on 21 September 2019, he removed $125 from the IOP interest total pre-filled at item 10 Gross interest to ensure he is not taxed again on this interest.

    End of example

    Example 6: part year residency – taxpayer resides overseas

    Susan left Australia to reside overseas on 20 May 2019. She notified the ATO of her change of address prior to her departure. As Susan was recorded as a non-resident when the interest data was extracted for 2019, the interest paid by the ATO to Susan in that financial year is not included in the pre-fill interest totals.

    When Susan checked her statement of account, she noted that she had received IOP of $120 on 15 November 2018. As she was a resident when this was paid, tax was not withheld by the ATO from the payment. When Susan prepares her 2019 income tax return she will need to adjust the 2019 pre-fill data to add in the $120 IOP at item 10 Gross interest to ensure this income is declared.

    End of example

    Manually calculating ATO interest

    You must manually calculate the ATO interest you want to claim as a deduction or must declare as assessable income, where:

    • you haven't been provided pre-fill interest data but your statement of account shows ATO interest
    • the tax agent Pre-filling report does not provide pre-fill interest data but displays a message advising that the client has ATO interest on account
    • interest transactions were processed on your account in the period 1 July 2015 to 9 November 2015 with an effective date prior to 1 July 2015 and these were included in prior interest claims – see Transitional year adjustments.

    You may wish to manually calculate the ATO interest where:

    • you prefer to report interest separately at the relevant labels in your tax return
    • you don't wish to rely on ATO pre-fill data
    • you want to determine which reporting method provides the best outcome for you.

    General rules for assessing ATO interest transactions

    • Effective date – the date a transaction affects the account for determining the daily balance and calculating GIC.
    • Processed date – the date a transaction is processed on the account.

    Item 10 Gross interest

    This label includes the interest we've paid or credited to you (IOP, IEP, DRI).

    The same rules apply for both the legislative process and the new reporting process.

    For the calculation:

    • use the processed date to determine when interest is paid
    • report if there is a new credit balance.

    Item D10 Cost of managing tax affairs or Item D10N Cost of managing tax affairs – Interest charged by the ATO

    This label includes an interest charge we imposed on you (GIC, SIC, LPI).

    For the calculation under the legislative rules:

    • use the processed date and effective date to determine when interest is incurred (Noting that GIC with an effective date of 1 July that relates to interest imposed in the period prior to 1 July will be reported in that prior year)
    • report net debit balance.

    For the calculation under the business rules for the new reporting process:

    • use the processed date
    • report if net deduction is greater than net assessable interest.

    Item 24Y Other income or Item 24X Other Income – Category 2 (ATO interest)

    This label includes amounts of interest we imposed that have been remitted or recouped (GIC remissions/credit adjustments, SIC remission/credit adjustments and LPI remission/credit adjustments).

    It does not include certain transactions such as, write-offs or released amounts.

    Under the legislative rules you must declare interest that has been remitted or reduced if you claimed a deduction, or can claim a deduction for the imposed interest.

    Interest is assessable in the year that it is remitted or recouped.

    For the calculation under the legislative rules:

    • use the processed date to determine when the interest is recouped
    • report net credit balance.

    For the calculation under the business rules for the new reporting process:

    • use processed date
    • report if net income is greater than net deduction total.

    Applying the different calculation rules

    You will need to analyse your statements of account and review all interest transactions in the relevant timeframe. The examples below show how to calculate your interest amounts using the new reporting process and applying the legislative rules.

    Example: Statement of account #1 – Income tax

    Processed date

    Effective date

    Transaction description

    Debit
    $

    Credit
    $

    Running balance account
    $

    DR/ CR

    02/06/2015

    02/06/2015

    General interest charge (GIC) from 01 Jun to 02 Jun 2015

    5.46

    0.00

    13,003.94

    DR

    02/06/2015

    02/06/2015

    Remission of general interest charge (GIC)

    0.00

    −5.46

    12,998.48

    DR

    01/07/2015

    01/07/2015

    General interest charge (GIC) calculated from 02 Jun to 30 Jun 2015

    99.82

    0.00

    13,098.30

    DR

    01/07/2015

    01/07/2015

    Remission of general interest charge (GIC)

    0.00

    −99.82

    12,998.48

    DR

    01/08/2015

    01/08/2015

    General interest charge (GIC) calculated from 01 Jul to 31 Jul 2015

    107.40

    0.00

    13,105.88

    DR

    01/09/2015

    01/09/2015

    General interest charge (GIC) calculated from 01 Aug to 31 Aug 2015

    108.29

    0.00

    13,214.17

    DR

    01/10/2015

    01/10/2015

    General interest charge (GIC) calculated from 01 Sep to 30 Sep 2015

    105.64

    0.00

    13,319.81

    DR

    03/11/2015

    03/11/2015

    General interest charge (GIC) calculated from 01 Oct to 02 Nov 2015

    116.46

    0.00

    13,436.27

    DR

    01/12/2015

    01/12/2015

    General interest charge (GIC) calculated from 03 Nov to 30 Nov 2015

    99.61

    0.00

    13535.88

    DR

    01/12/2015

    01/12/2015

    Remission of general interest charge (GIC)

    0.00

    −99.61

    13,436.27

    DR

    02/01/2016

    02/01/2016

    General interest charge (GIC) calculated from 01 Dec 2015 to 01 Jan 2016

    113.93

    0.00

    13,550.20

    DR

    02/02/2016

    02/02/2016

    General interest charge (GIC) calculated from 02 Jan to 01 Feb 2016

    112.65

    0.00

    13,662.85

    DR

    02/03/2016

    02/03/2016

    General interest charge (GIC) calculated from 02 Feb to 01 Mar 2016

    102.56

    0.00

    13,765.41

    DR

    Calculating ATO interest under the new process – statement 1

    Identify the interest transactions processed in the period 1 July 2015 to 30 June 2016.

    For the transitional 2016 year we adjust the report to exclude the GIC processed on 1 July as this was reported in the 2015 pre-fill report.

    • Total deductible interest = $107.40 + $108.29 + $105.64 + $116.46 + $99.61 + $113.93 + $112.65 + $102.56 = $866.54
    • Total assessable interest income = $99.82 + $99.61 = $199.43

    Net interest reported:

    Net deductible interest to report at item D10 = $866.54 − $199.43 = $667.11

    Calculating ATO interest under the legislative rules – statement 1

    Identify the income year GIC was incurred (generally by the effective date of the transaction) and interest that was remitted or reduced (by the processed date of the transaction).

    Interest reported:

    • Total deductible interest expense to report at item D10 = $866.54
    • Total assessable interest income to report at item 24Y = $199.43
    Example: Statement of account #2 – Income tax

    Processed date

    Effective date

    Transaction description

    Debit
    $

    Credit
    $

    Running balance account

    DR/ CR

    26/09/2015

    05/06/2014

    Tax return individuals – Income Tax for the period from 01 Jul 2012 to 30 Jun 2013

    1,199.15

    0.00

    1,199.15

    DR

    26/09/2015

    21/11/2014

    Tax return individuals – Income Tax for the period from 01 Jul 2013 to 30 Jun 2014

    15,644.15

    0.00

    16,843.30

    DR

    26/09/2015

    26/09/2015

    Credit offset from Client Integrated Account

    0.00

    −9,343.00

    7,500.30

    DR

    29/09/2015

    01/07/2014

    General interest charge (GIC) calculated from 01 Oct 2013 to 30 Jun 2014

    8.52

    0.00

    7,508.82

    DR

    29/09/2015

    01/07/2014

    Remission of general interest charge (GIC)

    0.00

    −8.52

    7,500.30

    DR

    29/09/2015

    02/06/2015

    Amended general interest charge (GIC) calculated from 01 Jul 2014 to 01 Jun 2015

    926.45

    0.00

    8,426.75

    DR

    29/09/2015

    02/06/2015

    Remission of general interest charge (GIC)

    0.00

    −926.45

    7,500.30

    DR

    30/09/2015

    01/07/2014

    Amended general interest charge (GIC) calculated from 01 Jun 2013 to 30 Jun 2014 (see note)

    62.32

    0.00

    7,562.62

    DR

    30/09/2015

    30/09/2015

    Remission of general interest charge (GIC)

    0.00

    −62.32

    7,500.30

    DR

    Amended general interest charge denotes an account correction by the ATO. This may impact interest amounts in prior years depending on the reporting method you use.

    Calculating ATO interest under the new process – statement 2

    Identify the interest transactions processed in the period 1 July 2015 to 30 June 2016.

    • Total deductible interest to report at item D10 = $8.52 + $926.45 + $62.32 = $997.29
    • Total assessable interest income to report at item 24Y = $8.52 + $926.45 + $62.32 = $997.29

    Net interest reported:

    Net deductible interest = $997.29 − $997.29 = $0.00

    There is no interest to be reported at items D10 or 24Y in the 2016 tax return.

    Calculating ATO interest under the legislative rules statement 2

    The account adjustment by the ATO does not change the timing of the deduction for the GIC which is incurred in the 2014 income year. It corrects the GIC that can be claimed as a deduction in the tax return for that year.

    2014 income year:

    • Total deductible interest to report at item D10 = $62.32

    You may need to amend your 2014 tax return if you wish to include this deduction with your other deductions claimed, if any.

    2016 income year:

    • Total deductible interest to report at item D10 = $8.52 + $926.45 = $934.97
    • Total assessable interest income to report at item 24Y = $8.52 + $926.45 + $62.32 = $997.29

    The 2013 and 2014 tax returns were lodged late in the 2016 income year. The GIC of $8.52 and $926.45 imposed on the liabilities established by the notices of assessment for these income years, is incurred in 2016. The $62.32 is incurred in the 2014 income year as the account adjustment retrospectively alters the interest imposed in that year.

    See also:

    Last modified: 24 Jun 2019QC 49294