Shortfall interest charge

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

Taxpayers are usually unaware of a shortfall amount until they receive an amended assessment, so instead of applying general interest charge (GIC) we apply a lower-rate interest called shortfall interest charge (SIC).

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

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.


The due date for payment of the additional 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 an 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.

See also:

Last modified: 10 Feb 2016QC 33406