ATO Cracks Down: Stricter Compliance & Interest Changes Coming

ATO Cracks Down: Stricter Compliance & Interest Changes Coming

The ATO’s compliance posture is tightening under the new Commissioner. The supportive, post-COVID leniency is out — a tougher, more rules-based regime is in.

Key Changes:

• Less Flexibility on Lodgement & Payment

• ATO expects on-time lodgement and payment.

• Tax Agent Lodgement Program still provides extensions — but don’t count on sympathy for delays.

Interest Remission Now Stricter

• ATO staff must now follow formal remission guidelines.

• Remission of GIC/SIC will be harder to obtain.

• Remission still possible under section 8AAG, but only if:

  • The delay wasn’t your fault and you acted reasonably.

  • Or, it was your fault but you rectified it swiftly.

  • Or, there are special, fair and reasonable circumstances.

GIC & SIC to Become Non-Deductible

• From 1 July 2025, General Interest Charge (GIC) and Shortfall Interest Charge (SIC) will no longer be tax deductible.

• GIC/SIC assessed or accruing on or after that date will hit the bottom line in full.

• Even retrospective daily interest will be affected if the assessment is after 1 July 2025.

Why It Matters

• Late payments will be more expensive, with no tax shield on interest costs.

• Interest remission will be much harder to argue.

• ATO is moving from guidance to enforcement.

What You Should Do Now

• Plan ahead: Work with your advisor to forecast tax liabilities and meet deadlines.

• Tighten cashflow controls: Avoid nasty last-minute tax shocks.

• Explore finance options: The cost of external funding may now be cheaper than ATO interest.

• Engage early: If issues arise, talk to the ATO early — don’t assume they’ll be lenient.

This is a clear shift towards a stricter, costlier compliance environment. The smart move is to stay ahead — because once you're behind, the ATO's patience (and your tax deductions) might be gone.