No More Deductions for ATO Interest Charges: How to Protect Your Cashflow
From 1 July 2025, interest charges on unpaid tax will no longer be deductible. If your business has tax debt—or may in the future—this change could hit your cashflow hard.
The good news? There are strategies to stay ahead of it. RJS has partnered with APX Capital to offer a solution that keeps interest deductible.
What’s changing?
- From 1 July 2025, General Interest Charges (GIC) and Shortfall Interest Charges (SIC) will no longer be tax deductible.
- Interest incurred before 30 June 2025 will still be deductible this financial year.
- If a notice of assessment or amendment is issued on or after 1 July, all associated interest becomes non-deductible—even if it relates to earlier income years.
Why it matters for your business
- No deduction means the real cost of tax debt rises—interest becomes an after-tax outflow.
- GIC is currently around 11.17% annually. Previously, you could offset this against tax.
- From July, every day your tax debt sits unpaid adds to your expenses with no tax benefit.
What you can do before 30 June 2025
- Pay down any ATO debt before 30 June to maximise this year’s deductions.
- Consider refinancing any larger tax liabilities now—before deductibility ends.
- Speak with your accountant about pre-emptive planning for disputes or amendments likely to trigger SIC.
RJS Tax Pay: Keep interest deductible
To support clients through this change, RJS has partnered with APX Capital to offer Tax Pay—a funding solution that lets you pay ATO debts while keeping interest deductible.
What is Tax Pay?
- A business line of credit used exclusively to pay tax
- Structured so interest remains deductible
- Offers greater flexibility than ATO payment plans
- No impact on existing loans or bank credit limits
How it compares
| Feature |
ATO Payment Plan |
Tax Pay (via APX Capital) |
| Tax-deductible interest? |
❌ No |
✅ Yes |
| Flexibility |
Limited |
Revolving facility, payment holidays |
| Impact on existing bank loans |
N/A |
Doesn’t affect loan limits or credit access |
Frequently Asked Questions
FAQs: ATO Interest Deductibility Change
When does the non-deductibility begin?
From any interest charged—and notices issued—on or after 1 July 2025.
Can I still deduct interest before 30 June?
Yes. GIC/SIC incurred up to 30 June 2025 remains deductible this tax year.
Is Tax Pay right for me?
If you carry ATO debt and want to maintain deductibility, speak to your accountant.
How is Tax Pay different to an ATO payment plan?
Tax Pay’s interest is fully deductible—and the facility is more flexible.
Need help planning for 1 July?
Use these RJS tools and resources to stay compliant and protect your deductions:
From 1 July, interest on unpaid tax will cost you more than ever.
Let’s help you stay ahead of it.
👉 Speak to your RJS accountant today
