Is GIC still charged while I am on a payment plan?

What GIC costs inside a plan

GIC is charged on the whole unpaid balance every day, and the rate is reset each quarter. For July to September 2026 it is 11.43% a year. Because you are paying the balance down, the interest falls each month, but over a typical plan it adds up:

These figures assume even monthly instalments and today's rate. They also assume no deduction, because GIC incurred from 1 July 2025 is no longer tax deductible. A business that could once claim the interest back at its tax rate now wears the full cost. The practical message is that a 12 month plan costs roughly half the interest of a 24 month plan on the same debt.

The one interest free exception

Small businesses with turnover under $2 million can get GIC remitted automatically on overdue activity statement amounts of $50,000 or less, provided the amounts are no more than 12 months overdue, all activity statements are lodged, there has been no more than one default in the last 12 months, finance is not available elsewhere, and the plan is paid by direct debit within 12 months. You have to phone 13 28 66 and ask for it. Details are at can I get an interest free ATO payment plan.

It does not apply to income tax, super guarantee charge, or larger or older activity statement debts.

Getting GIC remitted on an ordinary plan

The ATO can remit GIC in full or in part where the delay in paying was caused by circumstances beyond your control (illness, natural disaster, a major customer failing), where the interest arose from an ATO error or delay, or where paying it would cause serious hardship. It will not remit interest simply because you would rather not pay it, and it takes a dim view of requests from taxpayers who have not lodged or who keep defaulting.

Timing and method matter:

• Ask when you set the plan up. Requests for smaller amounts, roughly under $2,500, are often decided on the phone.
• Larger amounts need a written request setting out the cause, the dates, and what you have done to fix it.
• Ask again when the plan is paid out. A completed plan is strong evidence of good faith and the ATO is often more willing to remit at that point.

See GIC remission for the grounds and a structure for the letter. If the interest and penalties are a large part of the debt, it is worth paying the tax component first and then arguing about the rest.

What to do next

1. Run your debt through the ATO's payment plan estimator to see the interest on a 12 month plan versus a 24 month plan.
2. Choose the shortest term you can hold in a bad month, and set it up online or by phone.
3. Lodge a GIC remission request at the same time, and note a reminder to ask again once the plan is paid out.

More questions: 26 ATO payment plans questions answered · Full guide: ATO payment plans