ATO Interest Charges Losing Tax Deductibility – Why It Matters

There’s a tax change coming that’s flying under the radar.. but it could hit business cashflow hard.

From 1 July 2025, the interest the ATO charges on unpaid tax (GIC and SIC) will no longer be tax-deductible.

That means:

❌ No tax offset
❌ Higher real cost of tax debt
❌ More incentive to look at cheaper finance options

ATO interest rates are already sitting higher than most commercial loans. Without the deduction, paying off tax debt through the ATO could end up being the pricier choice.

Bookkeepers, flag this with your clients early. If they’re in payment plans or struggling with cashflow, now’s the time to explore:

✔️ Bank loan options
✔️ Payment strategies
✔️ Refinancing where it makes sense

Planning ahead gives you options. And options mean better decisions.

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SHORT ON TIME – HERE’S THE SUMMARY

From 1 July 2025, ATO interest on unpaid tax will no longer be tax-deductible. This change could increase the real cost of tax debt for many businesses. Now’s the time to review your cash flow, explore smarter finance options, and plan ahead.

27 May 2025 | Bookkeeping