Updated 8 September 2026
Since 1 July 2025 the general interest charge is no longer deductible. That one change made an ATO payment plan one of the most expensive ways to fund a business. This works out the real cost and what a commercial facility would have to charge to be worse.
Leave blank and we will just show you the rate an alternative has to beat.
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General interest charge is set under section 8AAD of the Taxation Administration Act as the 90 day bank accepted bill rate plus seven percentage points, and it resets every quarter. For the October to December 2026 quarter it is 11.51% annual, a daily rate of 0.03153425%. The quarter now running, July to September 2026, is 11.43%.
The headline number understates it, because GIC compounds daily. At 11.51% nominal the effective annual rate is 12.20%. On $100,000 carried for a year that is $12,197, not $11,510. The tool uses the October to December rate because most debts being compared are being carried forward, but a term longer than a quarter will span rates nobody knows yet.
From 1 July 2025, general interest charge and shortfall interest charge are no longer deductible. That applies whatever income year the underlying debt relates to, so a 2022 liability accruing GIC today is accruing non-deductible interest.
Before that change, ATO interest and bank interest were broadly comparable, because both were deductible and you compared the nominal rates. Now you are comparing a non-deductible cost against a deductible one, and they are not the same currency. To compare them you have to gross up the ATO rate by the tax you would have saved on deductible interest.
This is the single most common mistake we see on ATO debt at the moment. People compare 11.51% against a 9.5% facility, conclude the ATO is only two points worse, and leave the debt where it is. On an after-tax basis the gap is far wider than that.
Because the ATO cost is non-deductible, the deductible rate that costs you the same after tax is the effective GIC rate divided by one minus your tax rate. That gives the number a commercial facility has to beat:
| Who owes it | Tax rate | Break-even deductible rate |
|---|---|---|
| Company, base rate entity | 25% | 16.26% |
| Company | 30% | 17.42% |
| Individual, $135k to $190k | 39% | 20.00% |
| Individual, above $190k | 47% | 23.01% |
Worked example. A company on 30% owes $150,000 and pays it down over twelve months. Left with the ATO, the general interest charge is about $9,910, and none of it is deductible. Refinanced at 9.5%, the interest is about $7,719 and the deduction on it is worth $2,316, so the real cost is $5,403. Refinancing saves roughly $4,507 after tax, before establishment costs, and that is before the effect on lodgement status and credit reporting.
Two things this deliberately ignores. Establishment fees and the cost of the facility itself, which you should add. And the fact that a payment plan with the ATO does not require security or serviceability evidence, which a commercial facility usually does.
The ATO can disclose business tax debts to credit reporting bureaus. The conditions are specific: the debt is $100,000 or more, at least part of it is more than 90 days overdue, and the business is not effectively engaging with the ATO about it.
You get 28 days notice before disclosure. The critical point is the third condition: a payment plan that is being met counts as engagement, so entering one and keeping to it is what stops the disclosure. Doing nothing while intending to pay is not engagement.
Once a debt is reported, it affects your ability to obtain credit from every lender, which usually removes the refinancing option this page is about. The order matters: fix the debt before it is reported, not after.
If your BAS or superannuation guarantee statements are outstanding by more than three months, a director penalty notice for those amounts becomes a lockdown notice. The liability is personal to the director and cannot be remitted by appointing an administrator or liquidator. Placing the company into administration does not help; the debt stays with you.
Lodging inside the three month window keeps the notice remittable, even if you cannot pay. Lodgement and payment are separate obligations and lodgement is the one that protects you personally. If you are behind on both, lodge first.
Rates used: general interest charge 11.51% annual for the October to December 2026 quarter, daily 0.03153425%, effective 12.20% compounding daily. Company tax 25% and 30%. Individual rates 32%, 39% and 47% including the Medicare levy. GIC and shortfall interest charge non-deductible from 1 July 2025. Verified 8 September 2026 against the ATO. GIC resets quarterly, so check the rate before relying on a figure from an earlier quarter.
The arithmetic above is the easy part. Whether refinancing is available to you turns on lodgement status, serviceability and whether the debt has already been reported, and those need looking at together rather than one at a time.
11.51% annual for the October to December 2026 quarter, and 11.43% for July to September 2026. GIC is set as the 90 day bank accepted bill rate plus seven points and resets every quarter, published about two weeks before the quarter starts. Because it compounds daily, 11.51% is an effective 12.20%.
No. General interest charge and shortfall interest charge stopped being deductible on 1 July 2025, regardless of which income year the underlying debt relates to. That is what makes ATO debt considerably more expensive than the nominal rate suggests when compared with a deductible facility.
Usually not on cost alone, because GIC keeps running on the balance at a non-deductible effective 12.20%. A payment plan wins on access: no security, no serviceability test, and it counts as engagement so it stops the debt being reported to credit bureaus. Refinancing wins on cost whenever the facility rate is below the break-even figures above.
It can, and it does more often than people expect, particularly where the delay had a cause outside your control and your lodgement record is otherwise clean. Remission is discretionary, it is applied for in writing with the reasons set out, and it is far more likely once the primary debt is paid or under a plan being met.
Yes, for business debts of $100,000 or more where part is over 90 days overdue and you are not effectively engaging. You get 28 days notice. A payment plan you are actually meeting is engagement, which is the reliable way to stop it.
Lodge, immediately, even if you cannot pay. BAS or SGC statements outstanding more than three months turn a director penalty notice into a lockdown notice, which makes the amount personally payable by the director and cannot be remitted by liquidation. Lodgement is the obligation that protects you personally.
General information only, prepared without regard to your objectives, financial situation or needs. It is not financial product or taxation advice and should not be relied on as such. Liability limited by a scheme approved under Professional Standards Legislation.
