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  • Credit interest rates and calculation

    We pay interest where you make an early payment, overpayment or where the is a delay in paying your refund. Conditions apply to each payment type.

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    Interest rates

    The rate we use to calculate the amount of interest is set by law. We review and update the rate each quarter.

    We only pay interest amounts of 50 cents of more.

    Interest rates used for calculation of early payments, overpayments, and delayed refunds (2022–23)

    Period

    Interest rate
    (% pa)

    1 July 2022 to 30 September 2022

    1.00

    Interest rates used for calculation of early payments, overpayments, and delayed refunds (2021–22)

    Period

    Interest rate
    (% pa)

    1 July 2021 to 30 September 2021

    0.04

    1 October 2021 to 31 December 2021

    0.01

    1 January 2022 to 31 March 2022

    0.04

    1 April 2022 to 30 June 2022

    0.07

    Interest rates used for calculation of early payments, overpayments, and delayed refunds (2020–21)

    Period

    Interest rate
    (% pa)

    1 July 2020 to 30 September 2020

    0.10

    1 October 2020 to 31 December 2020

    0.10

    1 January 2021 to 31 March 2021

    0.02

    1 April 2021 to 30 June 2021

    0.01

    To view rates for previous years, see:

    How to calculate the interest amount

    Use the following formula is to calculate the interest amount:

    (A ÷ B) × C × (D ÷ 100)

    Where:

    • A is the number of days in the period for which you are entitled to interest
    • B is the number of days in the year (for example, 365 for non-leap years and 366 for leap years)
    • C is the amount on which the interest is payable
    • D is the interest rate for the period.

    You can also use the Interest on early payment calculator to work out the interest amount.

    From March 2022, we will automate the calculation and payment of interest on early payments. This process applies to amounts you paid us since 1 July 2021. We will pay the interest directly to your nominated bank account.

    Example of credit interest calculation

    The following example shows how to calculate the interest amount. The example assumes a normal year (365 days) and uses a single interest rate of 2%.

    Example: Single early payment

    Evan pays an amount of $1,926 more than 14 days before his payment. His early payment interest is based on the following:

    • On 29 October, the ATO issues Evan's notice of assessment showing a tax debt of $1,926.
    • Evan's due date for payment of this debt is 21 November of the same year.
    • Evan paid his tax debt in full at the post office on 3 November.

    To calculate the interest amount, work out the number of days from 3 November to 21 November including these 2 days. This is a period of 19 days.

    (19 ÷ 365) × $1,926 × (2 ÷ 100) = $2.01

    Evan’s interest on early payment amount is $2.01.

    He must include $2.01 as income in his tax return at 'Gross interest' in the income year he receives the interest or it is applied against his tax debt.

    End of example
    Last modified: 06 Jun 2022QC 58284