GIC Charges Will No Longer be Tax Deductible

08/06/2025

New Ruling to Take Effect on 1 July 2025

A significant change is coming that will affect businesses with outstanding tax debts: from 1 July 2025, the ATO’s General Interest Charge (GIC) will no longer be tax deductible.

This legislative update means businesses entering into or continuing an ATO payment plan will no longer be able to claim interest expenses as a deduction.

With this change imminent, brokers have an opportunity to step in and help their clients take action and avoid incurring additional expenses.

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In addition, brokers can also help their clients explore smarter and more cost-effective alternatives.

Why This Matters for Brokers and Their Clients

ATO payment plans have traditionally been a go-to solution for businesses to manage their tax debt. As was usually the case, the interest paid (GIC) was tax deductible, making it easier for businesses to cover outstanding tax debt and minimise costly expenses from penalties.

However, from 1 July, there no longer will be tax-deductible GIC. This change puts added financial pressure on businesses that already face cash flow challenges and are trying to remain compliant.

A PMA Private Loan: A Cheaper, Tax-Deductible Alternative

Unlike the GIC, interest paid on a PMA private loan remains fully tax deductible, providing a clear financial advantage over ATO payment arrangements.

Here’s why it makes sense to act before 1 July:

Interest deductibility: PMA loans still qualify for interest deductions, which can significantly reduce the net cost of borrowing.

Faster access to funds: PMA offers fast approval and settlement — often within days — ensuring clients can pay off their tax debts before the new rule takes effect.

Flexible loan terms: Short-term solutions tailored to business needs. First and second mortgages available without the red tape often associated with traditional lenders.

Time is Running Out — Take Action Before 1 July

Brokers are uniquely positioned to add real value to their clients by proactively recommending them to clear tax debts using affordable private loan solutions before the deductibility change kicks in.

At PMA, we work closely with brokers to provide tailored funding options that help businesses regain control of their finances and avoid unnecessary tax liabilities.

If you have any queries or a lending scenario you would like to discuss, feel free to contact us or you can complete our Quick App form here (< 10 mins).