When GIC applies
GIC applies 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.
How much GIC is applied
We review the GIC rate quarterly. 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
- a late payment notice
- GIC notice.
Effect of GIC 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 us to remit the GIC on your debt in part or in full. We may remit the GIC if there are extenuating circumstances – such as:
- the delay in payment being not due to you (for example – 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 delay in payment being due to you but you took reasonable action to reduce the delay, while it is also fair and reasonable to remit
- payment of the full amount of GIC would result in serious financial hardship for you.
You should ensure you have documents that support your request.
For more information, see PS LA 2011/12 Remission of General Interest Charge.
General interest charge (GIC) is applied to unpaid tax liabilities and is worked out daily on a compounding basis.