Remission of interest charges

Why we apply interest

We apply a general interest charge (GIC) on unpaid tax liabilities and shortfall interest charge (SIC) on shortfall amounts. We apply interest to:

• encourage timely payment of tax
• ensure taxpayers who pay late don't have an unfair financial advantage over taxpayers who pay on time
• compensate the community for the cost of late payment.

General interest charge

We may apply GIC if an amount of tax or some other liability is still unpaid after the date it should have been paid. This includes where:

• there is a tax shortfall because of an amendment or correction
• an instalment of tax is underestimated
• a return is lodged late.

Shortfall interest charge

The SIC has a lower rate than the GIC. This is because taxpayers are usually unaware of a shortfall amount until we tell them. When we tell you of a shortfall in your tax, we also include an interest charge on the shortfall amount.

The shortfall is the difference between the amount of tax originally assessed (refunds you claimed) and the amount of tax you were eventually assessed for (credits you were entitled to).

The due date to pay the additional tax and SIC is 21 days after the day we give you notice of the additional tax.

Once the due date has passed, GIC applies to any unpaid tax and SIC.

How we assess a request for GIC remission

In deciding whether to remit GIC, we consider things like:

• the circumstances that caused the delayed payment resulting in GIC
• how these circumstances prevented you from paying by the due date
• what steps you've taken to reduce the delay.

We look at whether you were responsible for the delay in payment or if it was outside your control. For example, if it was due to a natural disaster, industrial action, the unforeseen collapse of a major debtor or the sudden ill health of key staff.

If you were responsible for the delay, we will also consider whether it is fair and reasonable to remit the GIC.

We may ask you to provide documents to support your request.

 

For more information, see PS LA 2011/12 Remission of General Interest Charge.

How we assess a request for SIC remission

We use the information you provide as well as other information available to us, to consider your request. We may remit all, some, or none of the interest charge.

We also initiate remission if it’s appropriate to do so, for example if:

• we delay the start of an examination into your tax affairs
• we cause periods of unreasonable delay during an examination
• either of us experience a delay in obtaining information from a third party during the examination, which is not otherwise available to you
• we delay processing your amendment request
• the expected time to complete an examination is delayed due to our actions.

For more information, see PS LA 2006/8 Remission of shortfall interest charge and general interest charge for shortfall periods.

How to request a remission of interest

You generally need to write to us to request a remission of GIC and SIC.

For GIC requests, you need to explain in detail the circumstances, including relevant dates that led to the delay in payment and any steps you’ve taken to reduce the delay.

Contact us

You can contact us:

• through Online services – for business and agents
• by fax or mail.

Make sure to include:

• your full name
• your contact details
• your tax file number (TFN) or Australian business number (ABN)
• the reference number from any letter or notice advising you of our decision
• an explanation of why you think it is fair and reasonable for us to remit your interest charges
• details of interest amounts ($) and dates interest was imposed (if known).

Online services – for business and agents

Businesses can use Secure mail in Online services for business, and tax professionals can request a remission of an interest charge for their clients in Online services for agents using Practice mail.

To request a reduction of an interest charge:

1. Select the topic that your interest charge is related to (for example, activity statements, debt and lodgment, fringe benefits tax, income tax, refunds/remissions, superannuation or statement requests/account details).
2. let us know whether you are requesting a ‘remission of general interest charge’ or ‘remission of shortfall interest charge’.

For GIC, download and complete the ATO GIC Remission Application form (XLSX, 68.5KB)This link will download a file. Submit the completed form with your mail message.

Fax or mail

For requests relating to income tax liabilities and GST, you can:

• fax 1300 139 045
• send a letter to
  Australian Taxation Office
  PO Box 327
  ALBURY NSW 2640

For requests relating to fuel schemes and non-BAS claimants of wine equalisation tax and fuel tax credits, you can send your letter to:

Australian Taxation Office
PO Box 3007
PENRITH NSW 2740

Phone us

You may be able to request a reduction of SIC by phone if:

• SIC was calculated on an amount larger than your amendment assessment (for example, if your pay as you go withholding credits weren’t included to reduce the shortfall)
• SIC was calculated after you paid your tax
• we took longer than the service standard time to issue your amendment and SIC has accrued.

Our decision

If we decide not to remit the interest charge in full, we will send you a letter to explain our decision.

If you disagree with our decision to not remit, for:

• GIC – you won’t be able to lodge an objection with us or have the decision reviewed by the Administrative Review Tribunal (ART), but you may appeal our decision in the Federal Court under the Administrative Decisions (Judicial Review) Act 1977
• SIC – if the amount you still have to pay is more than 20% of the shortfall itself, you can object to our decision. Otherwise, you can request a review of the decision.

For more information, see Decisions you can't dispute via an objection.