Getting ATO interest remitted: when the ATO says yes, and how to ask

What GIC is and why it hurts

The moment any tax debt is overdue, the ATO applies the general interest charge. Three things make it nastier than it sounds:

• The rate is high — set quarterly at the 90-day bank bill rate plus a 7% uplift. For July–September 2026 it's 11.43% p.a.
• It compounds daily. Interest is charged on yesterday's interest, every day, including inside payment plans.
• Since 1 July 2025 it's not tax-deductible. For a company on a 25% tax rate, non-deductible GIC at 11.43% costs the same as deductible finance at over 15%. The full maths: ATO interest is no longer deductible.

On a $200,000 debt left for two years, GIC adds roughly $48,000. That's why remission — the ATO wiping some or all of the interest — is one of the most valuable and least-used tools available to a business in tax debt. There's also a smaller cousin, the shortfall interest charge (SIC, 7.43% for the same quarter), applied when an assessment is amended; it can be remitted on similar principles.

When the ATO actually remits

The law lets the ATO remit GIC where it's fair and reasonable to do so, and its policy focuses on two questions: was the delay caused by circumstances beyond your control (or at least not your fault), and did you act reasonably once the problem arose?

Fact patterns that succeed:

• Natural disaster, serious illness or injury of a key person, family tragedy;
• A major debtor collapsed or a contract failed — a specific, evidenced event outside your control that broke your cash flow;
• ATO error or delay — wrong advice, processing delays that grew the debt;
• The debt arose from an honest mistake that was voluntarily disclosed and fixed promptly;
• Smaller amounts with a clean record — where the GIC is relatively low (around $2,500 or less), a positive lodgment and payment history strongly influences the decision on its own.

Fact patterns that fail: "business was slow", "I couldn't afford it", or using the ATO as a de facto lender while paying other creditors. Ordinary commercial pressure is exactly what GIC is designed to price, and the ATO says no to these daily. Partial remission is common in mixed cases — for instance, wiping interest for the period a disaster genuinely disrupted the business, but not the year of drift after it.

How to ask

1. Small amounts: phone. Where the GIC in question is under about $2,500, a phone request can be decided on the call — have your story and your compliance record ready. Larger phone requests aren't decided on the spot; they're escalated to a specialist team.
2. Anything substantial: in writing. Use the ATO's remission request form (your agent can lodge it through online services) or a written application. Writing forces the request into the shape the decision-maker needs, and lets you attach evidence.
3. Time it sensibly. The strongest moment to ask is when the core debt is paid or under a plan you've been keeping — "we've fixed the problem, now here's why the interest shouldn't stand" is a far better posture than asking for remission on a debt you're not addressing.

What a strong request contains

There's no downloadable magic template, but successful written requests almost all follow the same structure — five short sections, usually two pages plus attachments:

1. What you're asking for, precisely. The GIC amount, the account, and the period it accrued over. Vague requests get vague treatment.
2. What happened. The specific event or circumstance beyond your control, with dates. Tie the timeline of the event to the timeline of the debt: the assessment says "this is why payment was delayed", not "things were hard".
3. What you did about it. Contact with the ATO, payments made, the plan entered and kept, costs cut, assets sold. This answers the second limb — that you acted reasonably once the problem arose. Delay you can't explain is the request's biggest enemy.
4. Your record. Years of on-time lodgment and payment before the event; the fact this is out of character. If your record is patchy, address it briefly rather than hoping it goes unnoticed — the officer has it on screen.
5. Evidence, attached. Medical certificates, insurance or disaster documentation, correspondence about the failed debtor, bank statements — one document per claim you've made. Assertions without evidence are the most common reason good stories still fail.

Why remission got harder in 2025–26

Two things changed at once. From 1 July 2025, GIC stopped being deductible — which sharply raised its real cost and triggered a surge of remission requests from businesses suddenly doing the after-tax maths. The ATO responded by tightening and formalising its approach: clearer public guidance on what qualifies, new request forms, dedicated teams for larger amounts — and a firmer line that remission is for genuinely exceptional circumstances, not a discount for asking. The COVID-era leniency, when interest was waived widely and quietly, is over.

The practical upshot: weak requests now fail faster, but well-evidenced requests that fit the criteria still succeed — the discretion hasn't gone, it's just being applied by the book. Which is an argument for building the request properly (or having someone who does them regularly build it), not for skipping it. One quirk worth knowing: because post-June-2025 GIC was never deductible, any of it the ATO remits is not assessable income — a remission now is worth its full face value, tax-free.

Remission alongside your other options

Remission deals with the interest, not the core debt — so it usually travels with something else: a payment plan for the principal, refinancing, or, where the whole debt is unmanageable, small business restructuring (which compromises interest and principal together). Penalties — like failure-to-lodge penalties — are remitted under a separate but similar process and can be included in the same letter. If you're weighing which combination fits, that's a conversation worth having with someone who negotiates these weekly: see get matched with a specialist.