iscover Flexible GIC remission could ease pressure on small business: CA ANZ
BusinessThe professional body has welcomed a commitment by the ATO to explore whether interest could be fully or partially waived for a set period at the beginning of a debt payment plan.
Chartered Accountants has welcomed a more flexible approach to the remission of the general interest charge (GIC) by the ATO, following the release of the Tax Ombudsman's review into GIC.
The Tax Ombudsman made a raft of recommendations following her review into the ATO's management of GIC remission, which were all accepted by the ATO.
One of the recommendations was for the ATO to explore whether interest could be fully or partly waived for a set period at the start of a payment plan and to explore greater use of partial remission.
Chartered Accountants ANZ (CA ANZ) said both these moves would give taxpayers greater certainty and prevent interest from undermining their ability to repay their tax debt.
"With economic conditions still challenging, small businesses need support to meet their tax debt obligations without being overwhelmed by compounding interest," said CA ANZ tax leader Susan Franks.
“When interest accrues faster than repayments, businesses can feel like they’re running uphill – but when businesses can see a clear path to clearing their tax debt, they more readily engage in the process, comply and recover."
Franks said this was good for small business, good for the economy and good for long-term revenue outcomes.
“Pausing or remitting interest in appropriate circumstances can also restore confidence and make repayment achievable," she said.
Collectible tax debt now sits at around $54 billion, with small businesses responsible for around two‑thirds of that amount. The GIC currently sits at 10.65 per cent and is no longer tax‑deductible from 1 July 2025.
“The interest charge is set by legislation, but how it is remitted can determine whether a business can realistically clear its tax debt,” Ms Franks said.
“With the ATO managing tax debts, of which more than 600,000 of those are currently on formal payment plans, these changes could play a critical role in supporting taxpayers.”
Miranda Brownlee
Miranda Brownlee is the editor of Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector.
Miranda has over a decade of experience reporting on the financial services and accounting sectors, working on a range of publications including SMSF Adviser, Investor Daily and ifa.
