ATO GIC remission requests are taking longer — what business owners need to know

In March 2026 the Tax Ombudsman released a review into the ATO's management of GIC remission, titled In the interest of fairness.

The review identified issues including inconsistent decision-making, unclear or vague guidance, poor communication, and the risk that taxpayers in similar circumstances could receive different outcomes.

It also found that the ATO tightened its approach to remitting interest charges from late 2023, moving away from a previously more generous position, without communicating that shift clearly to the community.

The ATO agreed to all of the review's recommendations.

The scale of the issue is part of the reason it drew attention.

The Tax Ombudsman's figures cover the period between 2019 and 2025.

The growth in interest owed has outpaced the growth in the underlying debt. That is the part worth sitting with: the interest is becoming a larger share of what taxpayers owe.

The ATO made a series of operational changes across late 2025 and 2026.

• more centralised GIC remission processing

• specialist officers dealing with more complex requests

• standardised remission request forms

• updated website guidance on how to request remission, including published case studies

• additional staff training and internal calibration aimed at improving consistency

• work on clearer explanations where a request is refused

Speaking at The Tax Summit in September 2026, the Commissioner said the ATO has limited over-the-phone GIC remission to amounts of $2,500 and centralised complex decisions with specialist officers. Requests above that level are generally routed to the dedicated review team rather than being resolved on a call.

His reasoning was straightforward: the previous decentralised approach may have delivered faster decisions, but it also increased the risk of similar cases being treated differently.

This is the point most commonly misunderstood.

GIC generally applies automatically to overdue tax liabilities. The Commissioner has a discretion to remit some or all of it, but that is a discretion — not an entitlement.

A remission request is also not an objection to the underlying tax liability. It does not dispute what is owed; it asks the ATO to reduce the interest that has accrued on it.

The interest is payable unless the ATO agrees to reduce it.

Difficult cash flow, on its own, does not create a right to remission.

The ATO's practice statement on remission of GIC, PS LA 2011/12, sets out how the discretion is generally exercised.

Broadly, remission may be more relevant where the circumstances that contributed to the delayed payment were outside the taxpayer's control, and the taxpayer took reasonable action to mitigate their effect.

Examples that appear in current ATO guidance and its published case studies may include natural disaster, the unexpected collapse of a major debtor, industrial action, and sudden serious illness or bereavement involving key personnel in a small business.

That list is not exhaustive, and each case turns on its facts.

What is generally not enough on its own is a broad statement such as “cash flow was difficult” or “the economy was tough”.

Current ATO guidance indicates that matters such as general adverse business conditions, a general economic downturn, a decision to extend credit to customers, or a decision to pay other creditors ahead of the ATO may not, by themselves, support remission. That is not an absolute rule — but it does mean those points rarely carry an application on their own.

Many businesses have genuinely dealt with wage increases, higher borrowing costs, insurance and rent increases, supplier increases, slower customer payments, margin pressure and weaker trading conditions in parts of their industry.

Those circumstances can properly form part of the background to a request.

There is a difference between describing the economy and explaining what actually happened to the business.

The stronger remission case sets out the specific events that affected this business, when they happened, and what they did to the ability to pay.

GIC accrues daily and compounds. Lodging a remission request does not automatically stop further GIC from accruing.

So longer processing times have a direct financial consequence. The balance being assessed keeps growing while the assessment is being made.

The GIC rate resets each quarter. For the July to September 2026 quarter the rate is 11.43% per annum.

As an illustration only: on a $500,000 tax debt, an 11.43% annualised rate represents roughly $57,000 of interest over a full year, before allowing for repayments and daily compounding. That figure is indicative, not a GIC calculation.

GIC and shortfall interest charge incurred on or after 1 July 2025 are generally no longer deductible for income tax purposes.

Commercially, that changes the comparison. An ATO interest rate cannot necessarily be compared directly with an equivalent-rate deductible business loan, because the after-tax cost is different.

This is another reason we do not think businesses should treat their ATO account as an informal source of working capital.

GIC generally continues to accrue on an outstanding balance during an ATO payment plan. Entering into a plan does not automatically make the remaining debt interest-free.

Interest-free arrangements do exist, but they are currently offered only to eligible small businesses in defined circumstances.

The Tax Ombudsman recommended that the ATO explore agreeing to full or partial GIC relief upfront for eligible taxpayers who enter into and comply with payment plans. The ATO agreed to the review's recommendations, and at the June 2026 implementation update that work was still in progress.

That is a recommendation being worked through — not a current general taxpayer entitlement. Do not assume a payment plan will stop the interest.

In our experience, the difference between a weak request and a strong one is usually preparation rather than argument.

Set out when the debt arose, what happened, when the circumstances began and when they changed, when the ATO was contacted, the payment-plan history, and what has been paid.

A decision-maker who can follow the sequence is in a much better position to assess it.

Depending on the case, this might include financial statements, cash-flow information, bank records, debtor information, evidence of a major customer failure, insurance correspondence, medical or other supporting evidence where relevant, records of finance or refinance attempts, and ATO correspondence.

Not every application needs every document. The evidence should match the explanation being given.

Cost reductions, debtor collection, refinancing, asset sales, capital introduced by the owners, payment plans entered into, lump-sum payments made, and keeping current liabilities up to date.

Reasonable action taken to mitigate the effect of the circumstances is central to how the discretion is generally exercised.

Where other parties continued to be paid while the ATO remained unpaid for a long period, that will usually need to be explained.

There may be a sound commercial reason. It is better to address it than to leave it to be inferred.

Explain what has changed, how the debt is being dealt with now, and what the business has put in place to avoid the same position recurring.

If a request is now going into a centralised specialist team rather than being decided quickly on the phone, there is an even stronger case for preparing the application properly upfront.

A larger application may need a detailed chronology, business history, financial information, an explanation of trading conditions, payment history, supporting evidence, and information about major events affecting the business.

What happened to the money matters.

An incomplete request that comes back for more information does not just delay the decision. It delays it while the interest continues to accrue.

A refusal does not always end the matter.

Based on the Tax Ombudsman's review, reconsideration may be possible where the taxpayer believes the ATO made an error, or where additional relevant supporting information can be provided that was not before the original decision-maker.

It is important to understand what this is not. A GIC remission decision does not carry the same objection rights that attach to an assessment. Improving the review and reconsideration pathway is one of the areas the ATO is still working on.

If a request is refused, the practical question is usually whether there is genuinely new or better-supported information — not simply whether you disagree with the outcome.

As at the Tax Ombudsman's June 2026 implementation update, work remained underway across a number of areas.

• guidance on partial remission

• consistency of decision-making

• specialist decision-making capability

• how and when additional information is requested

• identifying hardship and vulnerability

• better explanations in decision letters

• reconsideration and review pathways

• the interaction between remission and payment plans

This is a moving process. The position that applied to a request lodged last year is not necessarily the position today.

• understand the underlying tax debt — what it is, and how it arose

• quantify how much GIC is accruing on it

• make sure lodgments are current

• work out what can realistically be repaid, and over what period

• consider whether refinancing or external funding is available and appropriate

• determine whether legitimate remission grounds exist at all

• gather the supporting evidence before lodging, not after

Do not assume that lodging a remission request means the interest problem has been solved.

The business needs a plan that can deal with both outcomes: remission approved, and remission refused.

There is a reasonable argument for the ATO wanting GIC remission decisions to be more consistent. A business with a genuine remission case should not get a worse outcome simply because a different officer happened to answer the phone.

But greater consistency comes with another reality: the process may take longer.

While you wait, the underlying debt remains, GIC can continue accruing, the current rate is substantial, the interest is no longer deductible, and remission remains discretionary.

If there is a legitimate case for remission, prepare it properly. Explain what happened. Support it with evidence. Show what the business did in response.

And have a separate plan for dealing with the tax debt while the ATO considers the request.

If you have a significant ATO debt or want us to review whether there may be grounds for a GIC remission request, speak with the Wakefield Pacific team. You can also read how we approach tax and accounting.