myTax 2021 Credit for interest on tax paid

Complete this section if you are eligible to claim a credit for interest on some early payments made to the ATO:

• during 2020–21 income year
• more than 14 days before the due date.

Things to know

Early payments:

If, during 2020–21, you made any of the following payments to us more than 14 days before the due date, you can claim a credit for interest on early payment:

• income tax (including Medicare levy and Medicare levy surcharge) shown on your notice of assessment
• compulsory Higher Education Loan Program (HELP) repayment amount shown on your notice of assessment
• compulsory Vocational Education and Training Student Loan (VETSL) repayment amount shown on your notice of assessment
• compulsory Student Financial Supplement Scheme (SFSS) debt repayment shown on your notice of assessment
• compulsory Trade Support Loan (TSL) debt repayment shown on your notice of assessment
• compulsory Student Start-up Loan (SSL) repayment shown on your notice of assessment
• compulsory ABSTUDY Student Start-up Loan (ABSTUDY SSL) repayment shown on your notice of assessment
• interest on distributions from non-resident trust estates
• shortfall interest charge
• income tax penalty for the 1999–2000 and earlier income years
• general interest charge for lodging a late income tax return for income years up to and including 1999–2000
• general interest charge on an increase in the tax payable resulting from an amended assessment for income years up to and including 1999–2000.

If you have already requested the direct payment of interest on your early payment, don't claim it in your tax return.

The following are not early payments:

• pay as you go (PAYG) withholding amounts including    
  • amounts withheld from interest, dividends and royalties
  • amounts withheld by payers, including those withheld for HELP, VETSL, SFSS or TSL, SSL or ABSTUDY SSL
• PAYG instalments.

If you received interest from us, you must show it as income on your tax return for the year in which we paid or credited that interest to you.

See also:

• Interest on early payments, overpayments of tax and delayed refunds
• Practice Statement Law Administration PS LA 2011/23 Credit interest which discusses the policy and details when interest is payable.

Completing this section

You will need:

• notification from the ATO showing the date of the notice, the amount owing and the due date
• details of your date of payment, shown on your bank statement or receipt from the post office or the ATO. Allow three extra days if you posted your payment.
• to calculate your interest amount.
  To calculate your interest amount you can use our calculatorThis link opens in a new window or Working out your credit for interest on early payments.

To personalise your return to show credit for interest on early payments, at Personalise return select:

• You are claiming tax offsets, adjustments or a credit for early payment
• Credit for interest on tax paid.

To show your credit for interest on early payments, at Prepare return select 'Add/Edit' at the Adjustments banner.

At the Credit for interest on tax paid heading:

1. At Credit for interest on early payments – amount of interest, enter your interest amount.
2. Select Save and continue when you have completed the Adjustments section.

Working out your credit for interest on early payments

If the early payment extends over two or more interest periods, you will need to do steps 1 to 4 for the number of days in each period.

1. Work out the number of days your payment was early by:  
   • the period for which you can claim interest starts on the later of  
     • the date you paid the amount
     • the issue date on your notice informing you of the amount of tax, debt, interest or instalment
      
   • that period ends on the earlier of  
     • the due date for payment
     • the date when we refunded your early payment, if we refunded it.
      
    

For example, a notice of assessment issued to you on 19 September 2020 showed an amount of tax payable. If the amount was due on 21 November 2020 but you paid early, on 1 November 2020, the interest period would be 21 days: 1 November to 21 November.

2. Divide the number of days from step 1 by 365.
3. Multiply the answer you got at step 2 by the amount of the payment.
   If your payment exceeds the value of your tax debt, you don't receive early payment interest on the excess.
4. Multiply the answer from step 3 by the rate of interest for the period and divide by 100. For example, for the period 1 July 2020 to 30 September 2020, multiply by 0.10 and divide by 100.
   The interest rate that applies to each quarter of 2020–21 appears below.

Interest rates for early payments calculation

Period	Interest rate (% pa)
1 July 2020 to 30 September 2020	0.10
1 October 2020 to 31 December 2020	0.10
1 January 2021 to 31 March 2021	0.02
1 April 2021 to 30 June 2021	0.01

5. Add up the amounts you worked out for each period at step 4.
6. If the amount from step 5 is equal to or greater than 50 cents, enter the total at Credit for interest on early payments – amount of interest. Show cents. If the amount is less than 50 cents, you can't claim.

These myTax 2021 instructions are about credit for interest on tax paid.