Can I pay the original tax and not the interest?
Short answer
Yes. You can pay the primary tax and leave the general interest charge on your account. Paying the tax stops more interest building on it and puts you in the best position to ask for remission. The catch is that unpaid GIC is still a debt: it keeps compounding, and the ATO can collect it if remission is refused. Ask for GIC remission straight away.
How payments are applied to your account
Your ATO account lists the primary tax, the interest and any penalties as separate lines. When you pay, the ATO applies the money to the account rather than to a line you choose, and it generally works through the oldest amounts first. Interest is calculated on the whole unpaid balance, so in practice paying an amount equal to the tax leaves the interest as the remaining balance, which is what you want.
Once the tax is cleared, the only thing still accruing interest is the interest itself. If the amount left is a few thousand dollars, the ongoing cost of that is small compared with the original debt, which buys you time to make the remission case properly.
Why paying the tax first helps
The ATO is far more receptive to remitting interest when the underlying problem is fixed. A request that says "the tax is paid, here is why it was late, please remit the interest" reads very differently from one that asks for interest to be removed on a debt that is still outstanding. The same applies if you cannot pay in full: get a payment plan in place and kept, then ask.
It also matters because GIC incurred from 1 July 2025 is no longer tax deductible. Every dollar of interest the ATO remits is a clean after tax saving, so it is worth asking properly rather than paying the whole balance and moving on.
Tax paid but interest still on the account?
A specialist can help you make the remission case properly.
The risks of leaving interest unpaid
UNPAID INTEREST IS STILL A DEBT
If the ATO refuses remission, the interest is due like any other amount. It compounds daily, it can be offset against your next refund, and it can be pursued through the normal collection steps. Do not treat an unpaid GIC line as settled just because you have asked about it.
Two practical points. First, ask for remission promptly after paying the tax rather than months later, so the ATO sees a clear sequence. Second, if the interest is under about $2,500, a phone call on 13 11 42 with your compliance history ready may resolve it on the spot. Larger amounts need the written request described in how to get ATO interest waived.
What to do next
- Get a statement of account so you can see the primary tax, GIC and penalties as separate lines.
- Pay the primary tax, or set up a payment plan that clears it.
- Lodge a remission request for the interest straight away, with the reason for the delay and evidence.
Related questions
Will the ATO chase me for the interest if I have paid the tax?
Yes, eventually, if it is not remitted. The ATO does not treat interest as optional. A small unpaid GIC balance is low priority for the ATO but it will be offset against refunds and it keeps compounding. Put the remission request in as soon as the tax is paid so the balance is either removed or dealt with.
Can I choose which debt my payment goes to?
Usually the ATO applies payments to your account under its own allocation rules rather than to a line you nominate. If you have a specific reason to direct a payment, for example to clear a director penalty amount, call the ATO before paying and ask how to make sure it lands where you intend.
Tax paid but interest still on the account?
A specialist can help you make the remission case properly.
Get help nowMore questions: 15 ATO interest and penalties questions answered · Full guide: GIC remission