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General interest charge (GIC)

GIC is the ATO's daily-compounding interest on unpaid tax debts (BAS, PAYG). From 1 July 2025 it is no longer tax-deductible, making an ATO debt a costly overdraft.

By Chalkline. Last updated 25 May 2026. Verified 25 May 2026.

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The general interest charge (GIC) is the interest the ATO charges on unpaid tax debts, BAS/GST, PAYG withholding, the super guarantee charge, and income tax, when they are not paid by the due date. For a builder, it is the cost of treating the ATO as an overdraft, and a recent change has made that cost a lot worse.

How it works

  • It compounds daily. GIC is calculated on a daily compounding basis on the overdue amount, so the debt grows every day it is unpaid.
  • The rate is set quarterly. It is high relative to commercial lending: the April-June 2026 quarter rate is around 10.96% p.a. (indicative; the ATO updates it each quarter) (verified 2026-05-25, ATO).

The change that matters: no longer deductible

This is the part to internalise. GIC incurred on or after 1 July 2025 is no longer tax-deductible (verified 2026-05-25, ATO). It used to be a deductible business expense, which softened the real cost. Now it is not, so the effective cost of carrying an ATO debt is materially higher than the headline rate suggests, and higher than it was before July 2025. GIC incurred before that date remains deductible.

Why it bites builders

Late BAS and PAYG are common where cashflow is tight, and the ATO debt feels like a soft deadline. It is not: GIC compounds daily, is no longer deductible, and stacks on top of any administrative penalties. A builder carrying a BAS debt for months can pay more in non-deductible GIC than a commercial loan would have cost.

For a builder

  • Do not use the ATO as finance. Daily-compounding, non-deductible GIC is an expensive way to fund a cashflow gap.
  • If you cannot pay on time, act early. An ATO payment plan or commercial finance is usually cheaper than letting GIC run; treat BAS and PAYG as untouchable liabilities, per cashflow management.
  • Factor the deductibility change into decisions. Post-July-2025, the “I’ll just wear the interest” calculus has changed.

Also known as: GIC, ATO interest charge.

See also

Last updated: 2026-05-25. Verified: 2026-05-25. Quarterly review for currency.

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