General Interest Charge: What is It and How Does It Work?

 

If you have an unpaid tax debt, the Australian Tax Office (ATO) will charge you interest on it. This is called the general interest charge (GIC). You may receive a general interest charge (GIC) for various reasons, including non-payment or late payment of taxes. Many of you may have a lot of questions when you receive a GIC. If you receive a GIC, you can also ask your personal tax return accountant in Melbourne. In today’s blog, we’ll discuss what exactly GIC is, how it works and much more about it.

What does General Interest Charge Mean?

The general interest charge is imposed by the ATO if you have unpaid tax debts. You may receive GIC either for non-payment or late payment of taxes. It may be surprising when you receive GIC and you may get confused when you receive it.

How does the General Interest Charge (GIC) Work?

The GIC was introduced in July 1999. The reason behind this was to simplify the complex system of interest and penalty notices that were earlier imposed for unpaid or late tax liabilities. A tax accountant in Melbourne knows everything about tax-related matters. Thus, you can seek help from them to know why the ATO charges interest on tax debts. The GIC will be charged if:

• An amount of tax, levy, charge or penalty is unpaid or paid late.

• The wrong tax amount is paid because of not accurate estimated income tax statement.

On most taxes, GIC is charged, including income tax, goods and services taxes, fringe benefits tax, and pay-as-you-go (PAYG).

Are You Allowed to Cancel Your General Interest Charge (GIC)?

If extenuating circumstances were the reasons for a delay in payment, then a remission application can be applied. A remission of GIC indicates the cancellation or reduction of the penalty. Generally, the ATO will consider situations that made you unable to pay your tax debts, such as natural disasters, sudden ill health or industrial action. If the ATO deems that it was your fault for unpaid or late payment of taxes, then they will consider whether the situation could have been overlooked or not. In some situations, the ATO may reduce payment or delay a payment plan if the payment would cause financial hardship.

If you are confused about whether a GIC has been charged accurately or you are struggling to make payment for tax, then it s advisable to seek help from a tax accountant in Melbourne.

How often is the general interest charge updated?

The ATO calculates the GIC rate quarterly. The ATO keeps on updating the taxpayers about new tax rules and regulations. The ATO publishes GIC rates around 2 weeks prior to the start of each quarter.

Is GIC a penalty?

The GIC is a penalty notice and it is charged by the ATO for unpaid or late payment of taxes. If you are receiving a GIC, then it is a serious matter, and you need to deal with it as soon as possible. The reason behind this is that interest will incur on the GIC debt daily until you make the full payment. Despite this, if you are facing issues because of inaccurate business records, then you can seek help from a bookkeeper for small businesses.

Have you been ever charged a GIC?

Have you ever received a general interest charge from the ATO? Expert tax accountants can help you with this matter. The tax accountant will help assess your tax affairs. If there is a need to submit a remission request, then accountants can help.

Conclusion

The blog is all about general interest charge, how it works, and whether you can apply for remission or not. If you are receiving GIC, then you can ask your tax accountant to look after this matter. For the year the GIC was incurred, you would be eligible to claim a deduction in your tax return. It comes under the category of the Cost of managing tax affairs. Tax accountants can help you avoid paying more than required by managing everything. Moreover, if you want to seek help managing tax-related matters, then you can also contact Melbourne Accounting Firm.