Important Tax Change From 1st July

May 26, 2025

From 1 July 2025, the ATO will no longer allow tax deductions for interest charges on unpaid tax debts. This includes general interest charges (GIC) and shortfall interest charges (SIC) – a change that could significantly impact anyone with outstanding ATO liabilities.

Why is this happening?

The government wants to encourage timely payments of tax debt and reduce the use of the ATO as a low-cost line of credit.

What this means for you:

• ATO interest will no longer be tax-deductible.
• People who let ATO debts accumulate may end up paying more in after-tax dollars.
• Paying off ATO debts sooner could be a smarter move – especially with a tax-deductible finance solution.