ATO interest charges
Soon, you will no longer be able to claim ATO interest charges. Navigating the Australian Taxation Office’s (ATO) penalty and interest remission policies has become more challenging due to recent updates in their guidelines and policy being adhered to by the new ATO Commissioner. This will add substantially to the cost of the DEBT!
Taxpayers seeking relief from penalties and ATO interest charges must now adhere strictly to the conditions outlined by the ATO
Understanding ATO Interest Charges
The ATO imposes interest charges to encourage timely tax payments and to ensure fairness among taxpayers. The primary types of interest charges include:
– General Interest Charge (GIC):Applied to unpaid tax liabilities, accruing daily on a compounding basis.
– Shortfall Interest Charge (SIC):Applied when a tax return is amended, resulting in an increased tax liability.
Changes Effective from 1 July 2025 in regard to ATO interest charges – take note!!
Significant changes are set to take effect from 1 July 2025 . This is that of the Non-Deductibility of Interest Charges .
Taxpayers will no longer be able to claim deductions for GIC and SIC amounts incurred on or after this date.
Remission of Penalties and Interest
The ATO has the discretion to remit (reduce or cancel) penalties and interest charges under specific circumstances. However, recent guidelines have tightened the criteria for remission:
– Strict Adherence to Guidelines: Taxpayers must meet the conditions outlined in the ATO’s rulings to be considered for remission.
– Case-by-Case Assessment: Each remission request is evaluated individually, considering the taxpayer’s specific circumstances and compliance history.
Director Penalty Regime DPN !!
Company directors should be particularly aware of the director penalty regime:
– Personal Liability: Directors can be held personally liable for certain unpaid company taxes, including PAYG withholding and superannuation guarantee charges. This can occur if you lodge late or receive a Director’s Penalty Notice.
– Remission Conditions: The possibility of remission depends on timely reporting and payment of these liabilities.
If the ATO issues a DPN to you , seek immediate professional help as you only have 21 days to act from the date of the letter!
So, what do you do moving forward?
With the ATO’s updated guidelines, obtaining remission for penalties and interest charges requires strict compliance with specified conditions.
Taxpayers and company directors must stay informed about these changes and ensure adherence to ATO requirements to avoid incurring additional charges.Waiver of Penalties and Interest is getting harder so don’t rely on an immediate reduction of theses by the ATO moving forward!
