Understanding our GIC remission process
We are guided by the Law Administration Practice Statement PS LA 2011/12 Remission of General Interest Charge in making remission decisions.
The examples on this page have been developed with the purpose of:
- providing more clarity on our decision-making process
- informing taxpayers of situations when we would be likely to accept or decline remission of GIC requests.
For more information on how we decide whether to remit general interest charge (GIC) visit Remission of interest charges.
Each request is reviewed on its own merits, so the individual circumstances of requests will be considered when deciding to accept or decline a remission request. These examples are a guide to some of the more common circumstances we see and the likelihood that we may remit part or all of your interest.
The information on this page is intended to help you decide whether your circumstances may warrant remission.
GIC requests we would likely accept
While each case is decided on its own merits, the following are some circumstances where it's likely that your request for remission would be approved:
- where you (or your tax or BAS agent) have been impacted by natural disaster (such as fire, flood or drought)
- where industrial action has impacted you or your tax or BAS agent
- unforeseen collapse of a major debtor
- sudden ill health of an individual, sole trader or key personnel in a small business
- sudden ill health of your tax or BAS agent where it was not practical to make alternative arrangements to meet your obligations
- theft of, or damage to property critical to business operations
- where you have experienced or are currently experiencing financial abuse, coercive control, family and domestic violence or other circumstances that contribute to experiencing vulnerability that impact your ability to meet your tax obligations
- bereavement of a family member.
We consider remission more favourably if the late payment is out of pattern with your otherwise on time lodgment and payment behaviours over the last several years.
Examples
These examples include the types of scenarios where a request for remission of GIC would likely be accepted.
Example 1: natural disaster
Charlie, who is a sole trader running his business from home, had his home damaged during a flood. Charlie relocated to earn an income while repairs were made, the business relocation costs meant he was unable to pay debts resulting from the June to December 2023 quarters.
Once the business situation was under control, Charlie supplied documentation detailing their circumstances and requested remission of GIC accrued for these periods.
We remitted the GIC in full as Charlie took steps within a reasonable amount of time to address the circumstances impacting his ability to pay.
End of example
Example 2: hospitalisation
Sole trader, Shannon, had an unpaid income tax debt from November 2023. During that period, she was hospitalised and unable to run her business. This resulted in a loss of income and prevented her from paying the debt on time.
After recovery, Shannon needed some time to get back on track and set up a payment plan to pay her debts.
We remitted the GIC accrued as Shannon:
- demonstrated circumstances beyond her control
- took reasonable steps to reduce the delay in payment
- has a strong history of paying on time.
Example 3: theft or damage to property
Ros and Co is a small business. Their essential equipment was stolen and replacing it created unexpected costs. This reduced their cashflow and they didn't pay their BAS on time. The business filed a police report and lodged an insurance claim. They paid the BAS as soon as they received the insurance payout.
We remitted the GIC accrued as the business:
- demonstrated circumstances beyond their control
- took reasonable steps to reduce the delay in payment
- has a strong history of paying on time.
Example 4: unforeseen collapse of a major client
In April, a major client of TerryCo (a medium sized plumbing business) went into receivership, leaving an outstanding debt to TerryCo of $50,000. This impacted TerryCo's cash flow and ability to pay their March BAS.
TerryCo contacted the ATO before the BAS due date and entered a 3-month payment plan to resolve the debt.
Once the payment plan was complete, they requested a remission of the GIC.
We remitted the GIC accrued as the business:
- demonstrated circumstances beyond their control
- took reasonable steps to reduce the delay in payment
- had a strong history of paying on time.
Example 5: taxpayer experiencing vulnerability
Jess recently left a relationship where she was experiencing family and domestic violence. During that time, her former partner controlled her finances and tax affairs. As a result, she was unable to meet her tax obligations, and a tax debt remained unpaid. Jess has been doing casual work for the last 2 years, but her circumstances meant she was unable to lodge or pay tax.
After leaving the relationship, Jess contacted us and engaged a financial counsellor for support with her financial situation and rising tax debt.
We remitted the GIC accrued as Jess:
- demonstrated circumstances that affected her ability to pay, that weren’t within her control
- took steps to minimise the impact of these circumstances by engaging with us as early as reasonably possible
- demonstrated a clear link between the circumstances of domestic violence she experienced and why she was unable to lodge or pay on time.
GIC requests we would likely decline
While each case is decided on its own merits, the following are some circumstances where it's unlikely that your request for remission would be approved:
- adverse business conditions that impact cash flow
- general economic downturn
- fluctuations in currency or exchange rates
- general business risks such as late payment of invoices by a creditor
- using monies to expand your business instead of paying your overdue taxes
- missing a lodgment or payment date because you did not give your tax or BAS agent sufficient time to meet deadlines
- being on holidays when your lodgment or payment is due as you are expected to make arrangements to meet your obligations.
Examples
These examples include the types of scenarios where a request for remission of GIC would likely be declined.
Example 6: economic downturn
Ali Co has unpaid GST debt for the June, September and December 2023 quarters. Rising supply costs and interest rates impacted their cash flow and, while they continued trading, it impacted their business.
Ali Co supplied documents detailing their circumstances and requested a remission of GIC for these periods.
We declined Ali Co's request, as the general economic downturn also impacted the broader business community, most of whom still paid on time. Adverse effects on cashflow due to general economic downturn will not usually qualify for remission.
End of example
Example 7: finalised a payment plan
Samantha, a salary and wage earner, incurred an income tax debt after selling a property and being subject to capital gains tax. She didn't pay her tax on time because she reinvested the proceeds of the sale.
To manage the repayments, she set up an 18-month payment plan.
Once the payment plan was complete, she requested a remission of the GIC.
Samantha's request was declined because:
- her circumstances were within her control as she had the means to meet the tax debt but decided to reinvest the funds she had available instead of paying it. Her financial position demonstrated she could have repaid sooner
- remission would not be considered fair or reasonable.
Example 8: illness of key staff
XYZ Co is a medium size company with an unpaid PAYGW debt from the March 2024 quarter. The director of the company was unable to work for 4 months due to a severe illness.
During this period, the company continued trading (with no decrease in sales), paying invoices, and processing payroll. The other directors of the company were also able to continue managing the company during this period. When the ill director recovered, they followed up with their internal accountant to pay the debt. The company did not contact us during this time and had a history of not lodging or paying on time.
We declined the company's request for a GIC remission as they:
- failed to demonstrate how the director’s illness impacted their ability to pay on time
- have a history of not lodging or paying on time, and based on that history it was reasonable for us to conclude they would have not paid on time regardless of the circumstances.
Example 9: third party information
Sarah lodged her 2023–24 tax return and paid her tax liability late. She was granted a 3-month lodgement and payment deferral due to a delay in receiving trust distribution information. She lodged and paid 3 months after the deferred due date. The trust distribution information was available before that deferred due date.
Sarah isn't involved in the operation of the trust, and advised that she didn’t make any attempts to get the trust distribution information sooner. Sarah had a history of not paying on time.
We declined Sarah’s request for a GIC remission, because while she demonstrated circumstances beyond her control initially impacting her ability to lodge and pay on time, she didn't take reasonable steps to meet her obligations once those circumstances changed, having received the trust distribution information before the deferred due date.
Sarah:
- had an additional 3 months to lodge and pay without incurring interest or other penalties due to the deferral
- didn’t contact us once her deferred due date passed to inform us of the delay
- didn’t attempt to obtain the trust distribution information earlier, and once it was available, did not lodge by the deferred due date
- has a history of not paying on time.
Example 10: within the taxpayer's control
Neville earns wages as a ship’s captain. He also receives investment income. Neville lodged his 2022–23 tax return 6 months late. The lodgment resulted in an amount payable, which he then paid in full. However, Neville accrued GIC which was backdated to the original due date.
Neville works overseas from time to time and wasn’t concerned with lodging on time as previous late lodgments had resulted in refunds.
We declined Neville’s request for a GIC remission request, as:
- his circumstances were within his control
- it wouldn’t be fair and reasonable to remit the GIC as he should have made appropriate arrangements to ensure he lodged on time
- he has a history of late lodgment and he has an obligation to lodge on time regardless of if the outcome is a credit or debit.