Changes to deductions for ATO interest charges

Currently the ATO allows taxpayers to claim deductions for general interest charges and shortfall interest charges. From 1 July 2025, you will no longer be able to claim a deduction for these charges.

This means that the interest that is applied to your unpaid tax liabilities with the ATO can no longer be claimed, and the compounding interest and penalties for late payments of tax will be yours to pay.

This is a significant change which will financially impact those businesses with late tax payments.

We suggest managing your risk by assessing your tax liabilities and paying on time (if possible) to avoid penalty payments and additional interest on those penalties which can no longer be claimed.

If you require assistance in managing your tax liabilities, please contact us prior to 1 July to discuss the best options for you and your business.

Further information:

Denying deductions for ATO interest charges | Australian Taxation Office