How much interest does the ATO charge on an unpaid tax bill from 1 October 2026?

There is a version of this that plays out every November. The return went in during September, the assessment came back with a bill rather than a refund, and the payment date — 21 November — looked far enough away to be next month's problem. Then it isn't, and the question narrows to one thing: if the balance simply sits there for a while, how much does that cost?

From 1 October the answer moves up again. It has been moving in the same direction for several years, and one change made last year moved it much further than any rate rise has.

The new rate, and the one it replaces

The ATO sets the general interest charge (GIC) quarterly — it is the interest added to an amount of tax that is still unpaid after the date it should have been paid. For the October to December 2026 quarter the annual rate is 11.51%, which the ATO converts to a daily rate of 0.03153425%. For the July to September quarter now ending it is 11.43%, or 0.03131507% a day. Both figures come from the ATO's rates page, last updated on 4 September 2026; its practice is to announce each quarter's rate about two weeks before that quarter starts. How the number is arrived at is fixed by section 8AAD of the Taxation Administration Act 1953, not decided quarter by quarter.

The shortfall interest charge (SIC) — the narrower one, applied where the ATO amends an assessment upwards and finds tax was underpaid — moves the same way, from 7.43% to 7.51% for the October to December quarter.

In money: on a $10,000 balance the daily rate is about $3.15. The ATO calculates GIC on a daily compounding basis, so a quarter of leaving $10,000 alone is roughly $288, and compounding that daily rate across a full 365 days puts the effective annual cost closer to 12.2% than to the headline 11.51%.

It is the highest rate in fourteen years

This one is checkable rather than assertable, because the ATO publishes every quarterly GIC rate back to 1999 on the same page. The last time the charge was above 11.51% was the January to March quarter of 2012, at 11.62%. Every single quarter between that one and this one has been lower. Through the years when the cash rate sat near zero it bottomed out at 7.01%, in the October to December quarter of 2021.

Nothing was decided to make it climb. The calculation in section 8AAD produces a figure each quarter, and this quarter's figure is 11.51%. But the practical effect is that the gap between owing the ATO and owing a bank has closed from the ATO's side, at the same time as a second change widened it further still.

The rate is only half of what changed

Under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025, GIC and SIC incurred on or after 1 July 2025 can no longer be claimed as an income tax deduction. The ATO states it plainly on its own general interest charge page. Interest incurred before that date is unaffected and stays deductible in the year it was incurred.

A deductible cost and a non-deductible cost at the same headline rate are not the same cost, and the difference is larger than most people assume. Take someone whose next dollar of income falls in the 30% bracket for 2026–27, plus the 2% Medicare levy. When ATO interest was deductible, an 11.51% charge had an after-tax cost to them of about 7.8%, because the deduction clawed back the rest. It no longer does. Run the arithmetic the other way and a non-deductible 11.51% now sits level with a deductible facility charging about 16.9%. At the 37% bracket plus the levy, the equivalent is closer to 18.9%.

That is arithmetic, not a recommendation. It says nothing about whether any particular person should fund a tax debt some other way — borrowing to pay tax carries its own consequences, including whether the replacement interest is deductible at all, and that turns on facts specific to the borrower. The narrow point is that the comparison most people carry in their heads was formed when ATO interest was deductible, and it is now out of date by a wide margin.

Two things that don't work the way people expect

A payment plan does not switch the interest off. It sets out when the amounts will be paid; GIC keeps accruing on whatever is still outstanding until the balance is cleared. A plan is a way of avoiding firmer recovery action, not a way of freezing the meter.

Lodging late does not push the payment date back either. Where you lodge your own return between 1 July and 31 October and it results in a bill, payment is due on 21 November, whether the return went in during July or in the last week of October. If the assessment issues later than that, the ATO's rule is that payment is due 21 days after it issues. Either way, holding a return back buys time to prepare it — it does not buy time to pay, and it removes the weeks you would otherwise have had to find the money.

Remission is a process with published criteria

The ATO can remit all or part of GIC and SIC, and it sets out what it looks at. For GIC it asks what specific event or circumstance caused the delay, how that prevented payment by the due date, what steps were taken to reduce the effects, and what evidence supports it. It also weighs whether the delay was within your control, whether remission is fair and reasonable, and — where it was within your control — your prior lodgment and payment history. It says a request is generally considered more favourably where the late payment is out of pattern with otherwise on-time behaviour over the last several years, and that where the amount is relatively low, its example being $2,500 or less, a positive compliance history will strongly influence the decision. The policy behind the decision is PS LA 2011/12.

How to ask depends on who is asking. Individuals request a remission by phone or mail. Businesses including sole traders with an ABN can submit the relevant form through online services, or use phone or mail. Registered tax and BAS agents submit the correct remission form through Online services for agents. A separate form is needed for each taxpayer and each charge type — GIC and SIC do not go on the same one.

One knock-on of the deduction change is worth knowing here. Because GIC incurred on or after 1 July 2025 was never deductible, a remission of it does not have to be included as assessable income. Under the old rules, a charge you had already deducted and later had waived was added back as income in the year of remission — and that still applies to interest incurred before 1 July 2025.

This is general information current as at 16 September 2026, not advice about a particular debt or a particular remission request. The rate changes every quarter and the January to March 2027 figure will be published around mid-December, so the 11.51% above has a three-month life. We have written separately about the deduction change itself, including the 'incurred' test that decides which side of 1 July 2025 a given day's interest falls on — it is not the year the debt relates to, and not the day you finally pay. If the reason this is on your mind is the bill waiting on the other side of this year's return, the income tax calculator on this site will show where the 2026–27 rates land on your income, and getting the return and the instalments right in the first place — individual tax returns and business accounting are two of our four service areas — remains the only version of this that costs nothing.