General interest charge
General interest charge (GIC) is applied to unpaid tax liabilities, such as when:
- an amount of tax, charge, levy or penalty is paid late or is unpaid
- there is an excessive shortfall in an incorrectly varied or estimated income tax instalment.
The GIC rate is reviewed quarterly.
How much GIC is applied
GIC is calculated on a daily compounding basis on the amount outstanding.
Generally, the amount of GIC applied is notified in a statement of account, or a late payment notice or GIC notice.
Effect on income tax
You can claim a tax deduction for GIC in the year that it's incurred.
On the other hand, you're required to disclose remitted GIC in the year the remission occurs. This applies if you claimed a deduction (or can still claim a deduction) for the GIC incurred.
Remission of GIC on late payment of debts
You can ask that GIC on a debt be remitted in part or in full if there are extenuating circumstances, such as:
- the circumstances that contributed to the delay in payment were not due to you (eg natural disasters, industrial action, the unforeseen collapse of a major debtor or the sudden ill health of key personnel) and you took reasonable action to reduce the delay
- the circumstances that contributed to the delay in payment were due to you, you took reasonable action to reduce the delay, and it is fair and reasonable to remit
- payment of the full amount of GIC would result in serious financial hardship for you.
The general interest charge (GIC) is a uniform interest charge applied to unpaid tax liabilities. GIC is worked out daily on a compounding basis. The GIC rate is reviewed quarterly.