When a tax debt runs late, the interest can feel like insult on top of injury, especially when the reason you couldn't pay was something you didn't choose: a flood, a hospital stay, a customer collapsing owing you money. The ATO has the power to remit that interest, and it does, but only when you give it a reason and the evidence to back it up.
This guide covers the different charges you can ask to have remitted, what the ATO weighs, the reasons that usually succeed and fail, how to lodge a request, and the outline of a well-made request. It's general information as at October 2026.
What interest and penalties can the ATO remit?
Four charges come up most often. Each has its own test.
| Charge | When it arises | What the ATO considers | If you disagree with the decision |
|---|---|---|---|
| General interest charge (GIC) | Tax paid after its due date, or tax owing under a default assessment | What caused the delay, whether it was outside your control, steps you took to reduce the delay, your history, and whether remission is fair and reasonable | No objection right. New request, or judicial review in the Federal Court |
| Shortfall interest charge (SIC) | Extra tax from an amended assessment, from the original due date to the amendment | Your compliance history, why the tax was increased, how the shortfall came to light, and delays outside your control (including ATO delays) | Objection if the SIC still owing is more than 20% of the shortfall; otherwise a review request |
| Shortfall penalties | Errors in a return, such as failing to take reasonable care | Reasonable care, a reasonably arguable position, voluntary disclosure, your history, special circumstances | Objection if the penalty still owing is more than 2 penalty units |
| Failure to lodge on time (FTL) penalty | A return, BAS or other document lodged late | First, whether the tax agent safe harbour applies; then circumstances beyond your control, fairness and the result | Objection rights apply above the threshold |
For October to December 2026, GIC is 11.51% a year and SIC is 7.51% a year, both compounding daily and reset each quarter.
Why remission matters more since July 2025
GIC and SIC incurred on or after 1 July 2025 can't be claimed as a tax deduction. Before then, at least a business could deduct the interest, so its real cost was lower. Now every dollar of interest is a full after-tax dollar, which makes a remission request worth more than it used to be. The flip side is helpful: a remitted amount of post-July 2025 interest doesn't have to be included in your income.
When will the ATO remit GIC?
The law gives the ATO several paths, and its practice statement (PS LA 2011/12) mirrors them. In plain terms:
- The delay wasn't your fault, and you did what you reasonably could. Something outside your control caused the late payment, and you took reasonable steps to reduce the effect.
- The delay was partly your doing, but you acted reasonably and fairness favours remission. You caused or contributed to the delay, but you then took reasonable steps, and it would be fair and reasonable to remit.
- Special circumstances make remission fair and reasonable. This is where serious personal circumstances, including vulnerability, family and domestic violence, financial abuse and coercive control, are often considered.
- It's otherwise appropriate. A residual discretion for unusual cases, used sparingly.
The ATO says it views requests more favourably where the late payment is out of character with a good record of paying on time. For smaller amounts of GIC (around $2,500 or less), your compliance history strongly influences the decision.
What reasons usually succeed, and which don't?
Based on the ATO's published examples and guidance, and our own experience:
| Usually accepted, with evidence | Usually declined |
|---|---|
| A natural disaster that damaged your home or business | General economic conditions, rising costs or interest rates that affected everyone |
| Serious illness or hospitalisation of you, a carer or a key person, with a clear link to the late payment | Choosing to use the money for something else, such as reinvesting sale proceeds |
| Theft, fraud or loss of essential equipment, reported and claimed on insurance | A director's illness where the business kept trading and paying other bills normally |
| A major customer collapsing owing you money, where you contacted the ATO early | Missing a deferred due date after the reason for the deferral had passed |
| Family and domestic violence, financial abuse or coercive control | Busy periods, holidays, forgetting, or not receiving a reminder |
| Delay caused by third-party information you couldn't control, where you acted promptly once it arrived | Lodging late out of habit when a refund was expected |
Two threads run through every successful request: the cause was genuinely outside your control, and you acted responsibly once it hit. You contacted the ATO, set up a payment plan, paid when the insurance came through, and generally kept your other obligations up to date.
Worked example: a request worth making
Hypothetical, with round numbers.
Say a small building company has always paid its BAS on time. In February, its largest customer goes into administration owing $60,000. The company's March quarter BAS shows $40,000 payable. It lodges on time but can't pay. The director calls the ATO before the due date, explains the situation, and agrees a three-month plan, which it completes in full.
Over about three months, GIC at roughly 11.5% a year adds up to several hundred dollars as the plan pays the balance down (about $1,160 if the full $40,000 stayed unpaid for the whole period), and none of it is deductible.
A request setting out the customer's administration (with the administrator's notice and the unpaid invoices), the company's on-time payment history, the call to the ATO before the due date and the completed payment plan has strong grounds. The cause was outside the company's control, it took reasonable steps straight away, and the late payment was out of character.
Customer collapses are one of the most common reasons we see this in trades and construction businesses, where one large job can carry a quarter's cash flow.
Compare the same company if it had stopped paying BAS months earlier because cash was tight generally, said nothing, and only asked about the interest once a debt collector called. The same amount of interest, but a much weaker case.
How do you request GIC remission?
| Who | How |
|---|---|
| Individuals | Phone the ATO, or have your tax agent request it. Individuals can't lodge the remission form through online services themselves |
| Businesses and sole traders | Online services for business: attach the correct remission form to a secure mail message |
| Through a tax agent | Online services for agents (practice mail with the right form) or the registered agent phone line |
| By post | The address on the ATO's remission page for the relevant tax and charge |
A few practical rules:
- Use a separate form for each taxpayer and each type of charge. Don't combine GIC and SIC, or two entities, in one request. The ATO's GIC remission form must be submitted as an Excel file.
- Put everything in the first request. The ATO decides on what you give it, and there's no objection right if it says no to GIC.
- Larger phone requests take longer. Requests over $2,500 made by phone are escalated to a specialist team rather than decided on the call.
- For FTL penalties, lodge first. The ATO won't consider remission while the document is still outstanding.
- Keep paying while you wait. Interest keeps accruing on the unpaid tax until the debt is cleared.
What should a good remission request include?
This is the outline we use. It keeps the request short, factual and easy to say yes to.
- Who and what. Taxpayer name, TFN or ABN, the account (income tax or activity statement), the period, the type of charge and the exact amount you're asking to have remitted.
- A dated timeline. What happened, when, and how it affected your ability to pay or lodge on time. Keep it factual.
- The link. Show clearly how the event caused the late payment. This is the step most requests skip, and the reason many fail.
- What you did about it. Contact with the ATO, payment plans, partial payments, insurance claims, getting back up to date with lodgement.
- Your history. Your record of lodging and paying on time before the event.
- The request. Full or partial remission, and why the amount is fair and reasonable.
- Evidence, numbered and attached. Medical certificates, insurance correspondence, police reports, administrators' notices, bank letters, a letter from your tax agent.
- Answer the obvious objection. If you paid other creditors during the period, say why. If the business kept trading through an illness, explain who was managing what.
Our ATO penalty remission agent drafts the request in this structure, picks the right ground for each charge, and flags the counter-arguments the ATO is likely to raise. Your accountant checks the facts and evidence with you and decides whether it's worth lodging. Where the request involves illness, family violence or other personal circumstances, we handle the detail with care and only include what's needed.
What about shortfall interest and penalties after an audit?
When an amendment increases your tax, SIC applies from the original due date to the day before the amended assessment. The ATO may remit it where, for example, part of the delay was caused by the ATO itself, or the shortfall arose despite your genuine efforts. Penalties can be reduced or removed where you took reasonable care, had a reasonably arguable position, or made a voluntary disclosure. Our guide to what to expect in an ATO audit explains how those penalties are calculated.
If the ATO refuses to remit SIC and more than 20% of the shortfall remains as SIC, you can object. For penalties, objection rights apply where more than 2 penalty units remain. Our ATO objection agent drafts the objection and checks the deadline; your accountant decides the grounds.
What about failure to lodge penalties?
Start with the safe harbour. If you use a registered tax or BAS agent, gave them all the information they needed in time, and the late lodgement wasn't caused by the agent's recklessness or intentional disregard, the penalty shouldn't apply at all. If it doesn't fit, the ATO considers whether the circumstances were beyond your control, such as severe illness, delayed third-party information, a disaster or family violence. It typically declines requests based on holidays, workload, short-term minor illness or not getting a reminder. Our guide to overdue tax returns covers the FTL penalty in full.
Mistakes we see in remission requests
- Asking before the cause is clear. "Please waive the interest" with no reason gets a no.
- Telling the story without the link. An illness is relevant only if it explains why the tax was paid late.
- No evidence. The ATO is entitled to see it, and requests without it rarely succeed.
- Overstating. If the business kept trading normally, say so and explain why paying the ATO still wasn't possible. Credibility matters.
- Not calling before the due date. Contacting the ATO before a payment falls due is one of the strongest signs of reasonable steps. Keep the BAS due dates in view so you can act early.
- Waiting too long. Requests made promptly, while the circumstances are clear and documented, are easier to support.
- Stopping payments while waiting. Interest keeps running. Keep the plan going.
Should you ask for remission at all?
Sometimes the honest answer is no. If the delay was within your control, your history includes several late payments, and the interest is a few hundred dollars, a request is unlikely to succeed and the cost of preparing one may outweigh the result. In that case, the better move is to pay the debt as fast as possible to stop the interest growing, and fix whatever caused it. Our guide to ATO payment plans shows how much a shorter plan saves.
Where there is a genuine reason, it's almost always worth asking.
How BPAG helps
We look at the whole position before we ask for anything: what's owed, why, what's still unlodged and what can be fixed first. Then:
- We tell you honestly whether there are grounds, and which charge is worth targeting.
- We prepare the request with the evidence organised and the reasons linked to the dates.
- We lodge it and follow it up through our agent channels with the ATO.
- We deal with the debt itself through our overdue tax and ATO debt service, including payment plans and getting lodgements current.
- We step in on disputes through our ATO audits and disputes service if the issue is bigger than interest.
The agents draft. A qualified accountant reviews and signs off every request, and nothing goes to the ATO without a person approving it.
Frequently asked questions
Can I object if the ATO refuses to remit GIC?
No. There's no objection right for a GIC remission decision. You can make a new request if you left out key information or think the ATO made an error, or seek judicial review in the Federal Court, which only looks at whether the decision was made lawfully. That's why it pays to get the first request right.
Do I need to pay the debt before asking for remission?
Not for GIC, but paying the underlying tax, or being on a payment plan you're keeping, strengthens the request because it shows you're taking reasonable steps. For a failure to lodge penalty, the ATO requires the overdue document to be lodged before it will consider remission.
How long does a remission request take?
Small requests made by phone can be decided on the spot. Requests over $2,500 made by phone are passed to a specialist team, so the decision comes later. Written requests take longer. Interest continues to accrue in the meantime, so keep paying.
If the ATO remits interest, do I have to pay tax on it?
No, for interest incurred on or after 1 July 2025. Because GIC and SIC from that date can't be claimed as a deduction, a later remission doesn't have to be included in your income. For older interest that you deducted, a remission is generally assessable.
Can my accountant ask for remission for me?
Yes. A registered tax agent can lodge remission requests through the ATO's online services for agents or phone the agent line, and it's often quicker. The request still needs to set out your circumstances in full, with the evidence.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.