The Australian Taxation Office (ATO) is reminding taxpayers, from 1 July 2025 interest charged by the ATO for late payments or underpayments will no longer be tax deductible.

The Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 is now law. This means any general interest charge (GIC) incurred on and after 1 July 2025, regardless of whether the debt relates to an earlier income year, will no longer be tax deductible.

The change is designed to ensure that taxpayers who do the right thing and pay their tax in full and on time are not disadvantaged relative to those who do delay payment.

The ATO website has a range of helpful tools and free resources to help taxpayers and business owners to plan ahead and manage their cash flow to prevent a tax debt.

Source: Australian Taxation Office