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ATO interest calculator: GIC vs a business loan
ATO interest compounds daily and stopped being tax deductible on 1 July 2025. See what your tax debt costs to carry, and what the same money would cost as a secured business loan that pays the ATO out.
The tax debt
The loan that replaces it
The comparison assumes the full debt stays outstanding for the whole period on both sides. If you are paying the ATO down monthly, the GIC figure will be lower than shown.
- Loan interest
- Loan fees and costs
- Tax deduction
- Loan cost after tax
General information, not tax advice. Confirm deductibility with your accountant. Nothing you type here is sent anywhere.
How the ATO charges interest
General interest charge applies to unpaid tax debts, including amounts on a payment plan. The annual rate is set each quarter, converted to a daily rate and applied to the balance every day, so interest is charged on interest. The rate is 11.43% for July to September 2026 and 11.51% for October to December 2026.
Why the comparison has to be after tax
Until 30 June 2025 a business could deduct GIC, which took a quarter or more off its real cost. That deduction has gone. Interest and borrowing costs on a loan used to pay a business tax debt are generally still deductible. A company on the 25% rate paying 11.43% GIC bears all of it. The same company paying 11.7% on a loan bears about 8.8%. The reasoning is set out in is a loan cheaper than ATO interest.
What the numbers do not show
- Enforcement. A loan that is being paid does not issue garnishee notices, director penalty notices or statutory demands.
- Credit reporting of tax debts of $100,000 or more that are overdue by more than 90 days without engagement.
- Certainty. A loan has a fixed rate and an end date. GIC resets every quarter.
- Remission. The ATO can remit interest in some circumstances, and it is worth asking before you borrow.
When borrowing is not the answer
If the debt can be cleared from cash flow in a few months, the fees on a loan can outweigh the interest saved, and the calculator will show that. If the business is not viable, securing the debt against property moves the loss onto the property. How the funding works when it does make sense is on the ATO tax debt funding page, and the loan itself can be costed with the loan cost calculator.
Common questions
What is the ATO general interest charge rate?
The general interest charge is 11.43% a year for July to September 2026 and 11.51% a year for October to December 2026. The ATO resets it every quarter, and it compounds daily on the unpaid balance.
Is ATO interest tax deductible?
Not any more. General interest charge and shortfall interest charge incurred on or after 1 July 2025 are not deductible. Interest on a loan used to pay a business tax debt generally is, which is why the two have to be compared after tax.
How is GIC calculated?
The annual rate is divided by the number of days in the year to get a daily rate, and that is applied to the balance each day, including interest already charged. On $300,000 at 11.43%, that is about $94 on the first day, growing each day after.
Does GIC stop on an ATO payment plan?
No. It keeps accruing on the outstanding balance for the life of the plan. A payment plan spreads the debt out, and the interest continues to compound while it runs.
Enquire
Swap ATO interest for a known rate and end date.
Send the amount owing, the property and the timeframe. We’ll match you with a funder who comes back with indicative terms.