Major changes to ATO debt are coming from 01/07/2025

With the end of this financial year fast approaching, it is time to consider the management of current ATO debt.

Major ATO changes that will eat into your cashflow

The government has announced major changes and if they are passed into law will limit the ability of taxpayers to claim a tax deduction for ATO interest charges. This is planned to come into effect from 01/07/2025 and applies to all new lodgements as well as interest charges levied after this date.

 Both general interest charge (GIC) and shortfall interest charges (SIC) will be denied as deductions. This means that paying off ATO debt over time has become significantly more expensive. This combined with high ATO interest rates means that ATO debt has become an expensive option for financing debt.

The ATO is also dedicating more resources into chasing up and following ATO debt and are being much less lenient to taxpayers who are not on approved payment plans. The ATO is increasingly issuing penalties for late lodgements and proceeding with legal action if ATO debt is not kept up to date.

If you are having problems keeping up with ATO debt, the best approach is to be proactive and engage with the ATO early.

Please talk to us if you are falling behind with your ATO obligations & we can work with you and the ATO to make sure you have a clear plan to keep your cashflows strong & ATO obligations up to date.