ATO Interest Charges Are Now Non-Deductible — What Can You Do?

From 1 July 2025, the ATO’s general interest charge (GIC) and shortfall interest charge (SIC) are no longer tax-deductible — for any taxpayer, and for all tax years.

With GIC sitting at 11.17%, this now makes ATO debt one of the most expensive forms of finance — and you get no tax offset to soften the blow .

💡 Solution: Refinance with a Bank

• Business loans used to repay GST, PAYG, or income tax may still qualify for interest deductions
• Individual tax debts tied to business income (e.g. sole traders) may be deductible
• But for individuals with tax debts from wages or investment income, interest won’t be deductible

🔍 Example

Sam, a sole trader, borrows $30,000 to pay tax debts.

• $20k from business activity → interest deductible
• $10k from wages → interest not deductible→ Only ⅔ of interest is claimable.

⚠️ Be Careful: Director or beneficiary loans to pay company/trust tax debts are 

not deductible to the individual

✅ Takeaway

If you’re carrying ATO debt, consider external refinancing — it may offer better rates and a tax deduction, but only in the right circumstances.

👉 Unsure if you can deduct interest? We can help assess your situation and structure your finance the right way.