ATO General Interest Charges – Tax Ombudsman Calls for Fairer Approach

ByDavid Woo

On 2 March 2026, the Tax Ombudsman Ms Ruth Owen has released her report into the review of the ATO’s management of GIC remission.   The Tax Ombudsman called for improvements in how the Australian Taxation Office (ATO) administers relief from General Interest Charges (GIC) on overdue tax debts. The review found that the current system can produce unfair outcomes, particularly for individuals and small businesses attempting to manage and repay tax liabilities.

GIC is applied when tax obligations are not paid on time. The current rate is 10.65% and compounds daily, meaning interest continues to accrue even when taxpayers are making payments under an approved payment arrangement. As a result, relatively small tax debts can grow rapidly and, in some cases, the accumulated interest can exceed the original tax owed.

Key findings

The review highlighted several important issues with the administration of interest charges:

  • Rapid growth in interest debt: Between 2019 and 2025, the balance of GIC owed increased by 185%, compared with 94% growth in underlying tax debt.
  • Interest forming a significant portion of tax debt: Of the approximately $55 billion in uncontested tax debt, around 18% represents interest charges.
  • Stricter remission approach: The ATO tightened its approach to reducing interest charges in late 2023, but the change was not clearly communicated to taxpayers or tax practitioners.
  • Inconsistent decision-making: Vague guidance has led to inconsistent outcomes in GIC remission requests.
  • Limited explanation of decisions: ATO letters often provide little detail about why a remission request was refused or what options are available if a taxpayer disagrees.

Options for taxpayers

Taxpayers experiencing difficulty paying their tax debts may be able to request a remission (reduction or refund) of interest charges from the ATO by providing supporting information about their circumstances.

The review also noted that the ATO may reconsider a remission decision if additional information becomes available or where a taxpayer believes an error has been made in the decision-making process.

Proposed improvements

The Tax Ombudsman has recommended that the ATO consider allowing interest-free payment arrangements for eligible taxpayers who enter into and maintain compliant payment plans. This would allow taxpayers to repay their debt without further interest accruing while they are actively meeting their obligations.

The ATO has agreed to the recommendations and has already introduced several improvements to its processes, including clearer guidance and a more structured approach to assessing remission requests.

How we can assist

If you have ATO tax debt or have been charged interest, it may be possible to seek a remission of those charges or negotiate appropriate payment arrangements with the ATO. If you would like assistance in dealing with the ATO or reviewing your options, please contact our office.

For more information, visit TaxOmbudsman.gov.au

Similar Posts