Always pay your tax debt in full and on time. If you don’t pay by the due date, you will be charged general interest charge (GIC) and may face firmer action from the ATO.

The ATO automatically applies GIC to tax debts that are overdue. The interest rate changes quarterly and is published on the ATO website. 

GIC incurred on or after 1 July 2025 can no longer be claimed as a deduction on your tax return.  

When you don’t pay on time, the ATO may also take firmer action or legal action which can include the following:

• issuing a garnishee notice – this is where the ATO recovers the money you owe directly from your bank accounts or from another creditor, and puts it towards your tax debt
• a director penalty notice (DPN) – when a company doesn’t lodge and pay their tax on time, the ATO may issue a DPN and recover the money owed directly from the company director or director’s personal assets. 
• sharing information about your debt with credit reporting agencies – this may impact your credit rating 
• applying to court for a direction to wind up your business
• legal action 
• freezing orders which prevent you from disposing of (e.g. selling, giving away, transferring) or moving assets.

If you think you’re not going to be able to lodge or pay on time, then contact the ATO as soon as you can by phoning 13 11 42. The ATO will discuss the options available to you to help manage your debt and payments.