iscoverGIC and SIC incurred by taxpayers on or after 1 July 2025 will no longer be tax deductible.
Guide to the non-deductibility of GIC and SIC from 1 July 2025
06 August 2025
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7 minute read
The correct identification of when an amount of GIC or SIC is deductible, and whether it is ‘incurred’, will determine whether the amount is deductible.
Longstanding ATO views include the following:
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SIC is incurred only upon the issue of an amended assessment
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GIC is incurred only upon the issue of an assessment
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GIC which continues to accrue after the assessment is issued is incurred on a daily basis.
When an outstanding tax debt spans the 2024-25 and 2025-26 income years, apportionment of ATO interest charged in relation to that debt into deductible and non-deductible components may be required, based on these established views.
Taxpayers and their advisers may be considering alternative sources of funding to pay overdue tax debts. However, deductibility of interest on such loans is not a given and will depend on the taxpayer’s circumstances:
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Non-business individual taxpayers will not be able to claim an interest deduction under s. 8-1.
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Individuals carrying on a business may be entitled to a deduction under s. 8-1 for interest incurred on money borrowed to meet tax debts relating to their business activities.
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Companies carrying on a business for the purpose of gaining or producing assessable income are entitled to a deduction under s. 8-1.
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All taxpayers are denied a deduction for the interest under s. 25-5 to the extent the money is borrowed to pay income tax, PAYG withholding or PAYG instalments.
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Business taxpayers may continue to deduct the interest under s. 25-5 to the extent the money is borrowed to pay other business-related tax debts.
Further considerations will apply where a taxpayer chooses to use credit card debt or a related party loan to finance the payment of the outstanding tax debt.
The ATO has issued some initial website guidance. Clarity has been sought in relation to a number of technical issues.
Read the IPA's Guide to the non-deductibility of GIC and SIC here.
This article and link have been updated to include extra tables and scenarios.
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