The ATO's Interest Charge on Late Tax Rises to 11.51% From 1 October

The new rates

The ATO updated its rates page with the October to December 2026 figures on 4 September 2026. It generally announces each quarter's rate about 2 weeks before the quarter starts, so this one came early.

GIC applies when tax or another ATO liability stays unpaid after its due date. The ATO lists three common triggers: a shortfall after an amendment or correction, an underestimated instalment, and a return lodged late. SIC is the lower charge the ATO uses instead of GIC when an income tax return is amended and a shortfall appears, because people usually do not know about the shortfall until the amended assessment arrives. The extra tax and SIC are due 21 days after the notice of amended assessment issues. Anything still unpaid after that attracts GIC automatically.

How the ATO sets the rate

The rate is fixed by law, not chosen by the ATO. Section 8AAD of the Taxation Administration Act 1953 takes a base interest rate, the monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank, adds 7 percentage points, and divides the total by the number of days in the calendar year. SIC uses the same base rate with an uplift of 3 percentage points.

Working back from the published figures, both charges imply a base rate of 4.51% for October to December, against 4.43% for July to September. The whole 0.08 point rise in GIC comes from the bank bill yield; the 7 point margin never moves.

The charge is calculated on a daily compounding basis on the amount overdue. Each day's interest is added to the balance, and the next day's interest is charged on that larger figure.

What it costs on a $5,000 debt

On the first day overdue, $5,000 attracts $1.58 of GIC at the new rate, against $1.57 before 1 October. Over longer periods compounding widens the gap:

Worked on $5,000 at the daily rate, compounded daily. Each column holds one rate for the whole period. A real debt accrues at whatever rate applies on each day, and the rate for January 2027 onwards has not been published, so the 365-day row is a comparison of the two rates rather than a forecast.

The rise itself is small in dollars. The bigger number is the charge: $609.83 a year on $5,000 is money that buys nothing and, since 1 July 2025, earns no deduction. If a quarterly instalment has slipped, the options and what the ATO does next are covered in what happens if you do not pay PAYG instalments. Businesses on quarterly statements can check the next payment date in BAS due dates.

The fourth rise in a row

The ATO's historical table shows GIC rising in the January, April, July and October 2026 quarters, after a fall in October to December 2025. That makes this the fourth consecutive quarterly increase. It also takes GIC to its highest level since the January to March 2012 quarter.

No tax deduction for GIC

GIC and SIC incurred on or after 1 July 2025 cannot be claimed as a deduction. The ATO has removed the label that used to take the claim (D10, label N, interest charged by the ATO) from the 2026 and later individual returns.

There is one upside. Because the interest is not deductible, any of it the ATO later remits does not have to be declared as income. The old rules still apply to GIC incurred before 1 July 2025: deductible in the year incurred, and assessable in the year it is remitted.

The practical point is timing. A 2025-26 return lodged late, or a balance left unpaid past its due date, runs up interest at 11.51% with no tax offset against it. The tax return due date guide sets out which date applies to you.

Asking the ATO to remit it

The ATO can remit all or part of the GIC where there are extenuating circumstances. A request should cover:

• the specific event or circumstances that caused the late payment
• how that stopped you paying by the due date
• what you did to reduce the effect
• any evidence that supports it.

The ATO also looks at whether the delay was in your control and at your payment history. It says it views requests more favourably when the late payment is out of pattern with several years of on-time lodgment and payment, and that where the GIC is relatively low, for example $2,500 or less, a good compliance history will strongly influence the decision. The policy it applies is PS LA 2011/12.

A refusal to remit GIC cannot be objected to or taken to the Administrative Review Tribunal. You can lodge a fresh request if you left out key information or think the ATO made an error, or seek judicial review in the Federal Court. SIC is different: if more than 20% of the shortfall remains payable after the decision, you can object.

Frequently asked questions

Sources

ATO pages fetched 25 September 2026. Every rate on this page is read from the same data file that is checked against the ATO's published daily rates.

• General interest charge (GIC) rates (QC16145, last updated 4 September 2026). Both quarterly GIC rates, the daily rates and the historical table used for the trend.
• Shortfall interest charge (SIC) rates (QC18426, last updated 4 September 2026). Both quarterly SIC rates, daily compounding, and the 3% uplift on the 90-day Bank Accepted Bill rate.
• Taxation Administration Act 1953, section 8AAD (ATO legal database). The GIC rate formula: base interest rate plus 7 percentage points, divided by days in the calendar year.
• General interest charge (QC33415, last updated 10 June 2026). Daily compounding, when GIC applies, and the end of deductions from 1 July 2025.
• Shortfall interest charge (QC33406, last updated 10 June 2026). When SIC applies, the 21 day payment window and the switch to GIC after it.
• Remission of interest charges (QC33808, last updated 22 January 2026). What a remission request needs, the $2,500 compliance history note, and review rights.
• Calculate and report ATO interest (QC49294, last updated 20 July 2026). Removal of the D10 label N interest deduction from 2026 returns.

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