Hi, it’s Catriona from Hartigan Law.
I wanted to talk about what happens with the general interest charge if you’re in a payment plan.
Quite often I have people say to me that they thought that, if they negotiated a payment plan with the Tax Office to pay their unpaid tax debt over time, that the Tax Office would stop charging them general interest charge. Unfortunately, this isn’t true.
The Tax Office will continue to impose the general interest charge until a tax debt is paid off in full, and that’s the standard position that applies to the vast majority of tax debts.
Occasionally, there are some programs that are brought in to allow the Tax Office to give you an interest free period. For the last couple of years has been one that’s applied to small businesses who have an activity statement debt of less than $50,000. In this case, and if that small business meets some very specific criteria, the Tax Office can allow them a 12-month interest free period.
I won’t go through the criteria now, but I will put a link below to the Tax Office website which sets out what that criteria is.
But look generally the position is that if you owe a tax debt, general interest charge does continue to apply to that debt until you’ve paid it off in full.
Now, of course, if you have been charged the general interest charge, you can ask the Tax Office to remit that. You need to explain what’s happened, why you haven’t paid your tax debt, what the plan is to pay it off in full, etc.
There’s a lot of information on my website about that, so I encourage you to have a look, and if you have any questions about the general interest charge or tax debt in general, then give me a call and let’s have a chat about how I can help.
- How the ATO uses legal action to collect tax debts from an individual
- How does the ATO collect tax debts?
- How to ask the ATO for a remission of your general interest charge (or GIC)
- [Tool] Payment Plan Calculator
About Hartigan Law
I am a specialist tax disputes lawyer with over a decade of experience in dealing with the ATO.
I’ve helped many clients to deal with their tax debt, even after the ATO has started debt collection processes. I have helped clients to avoid bankruptcy by reducing their tax debt and successfully negotiating payment plans with the ATO.
I work with clients all over Australia. I can do this because the tax issues I deal with are Federal – the tax law is the same no matter where in Australia you live.