Can the ATO reduce interest? Start with your circumstances.

Remission is a decision, not an entitlement

The ATO may remit some or all general interest charge in eligible circumstances. A request should explain what happened, how it affected payment and what you did to address it. Evidence matters.

Remission of interest is different from reducing the underlying tax liability. Do not assume that paying through a loan or entering a plan will make interest disappear. Your accountant can help assess whether a request is appropriate.

Prepare an accurate explanation

Provide a clear timeline, relevant records and details of steps taken to limit the delay. The ATO assesses the request under its rules; success and timing are not guaranteed.

Continue to address the payment position while a request is considered. If you have received a notice, confirm any deadline separately. A remission request should not be assumed to pause recovery action.

Two different charges, two different remission pathways

GIC and failure-to-lodge penalties are assessed under different considerations and can be remitted separately. Interest remission generally focuses on whether the circumstances causing the delay in payment were reasonable and outside normal business risk, while penalty remission considers lodgement behaviour and compliance history more broadly. A business can succeed in one request and not the other, so it is worth treating them as separate conversations with your accountant rather than one combined appeal.

This separation also means that even a full remission of penalties does not automatically remove GIC, and vice versa. Be specific in any correspondence about exactly which charge you are asking the ATO to reconsider.

Factors that can support a remission request

Evidence of a genuine, identifiable disruption tends to carry more weight than a general description of a difficult trading period. This can include things like serious illness, a natural disaster, significant system failure, or a major customer or supplier collapse that materially affected the business’s ability to pay on time. A clear compliance history — lodging on time even when payment was delayed — is also relevant, since it suggests the issue was genuinely about capacity to pay, not about avoiding obligations altogether.

The steps taken once the problem arose matter too. Contacting the ATO promptly, entering into and maintaining a payment arrangement, and providing requested information without delay all support a more favourable assessment, even though none of these guarantee a particular outcome.

Factors that typically weaken a request

A long pattern of repeated late lodgements or late payments across multiple periods is harder to frame as an isolated, unexpected event. Similarly, a request that offers no supporting evidence, or evidence that does not align with the dates the interest accrued, is less persuasive regardless of how genuine the underlying hardship was.

Requests framed purely as "we cannot afford to pay the interest" without addressing why the original liability was not paid on time tend to be weaker, because remission is about the reasonableness of the delay, not simply about current affordability.

A hypothetical scenario comparing two outcomes

These are illustrative scenarios only, not real cases or predicted outcomes. In one hypothetical, a business experiences a sudden, well-documented flood that closes its premises for six weeks; BAS is lodged on time throughout, the ATO is contacted within days of the event, and a remission request is lodged with insurance correspondence attached specifically covering the affected period. In a second hypothetical, a business has missed four consecutive BAS lodgement deadlines over the past two years and requests blanket remission of all accumulated GIC without specifying any particular triggering event.

The structure of the first scenario — specific event, specific dates, prompt contact, supporting evidence — is generally the stronger approach, but whether any particular request succeeds depends entirely on the ATO’s assessment of the real facts, not on following a script.

Checklist before lodging a combined request

• Separate the GIC component from any penalty component in your request.
• Attach dated evidence for the specific period the interest or penalty relates to.
• Confirm your lodgement history is accurate before claiming it as a strength.
• Ask your accountant whether a payment arrangement should be requested alongside remission.
• Keep records of all correspondence and reference numbers.

Common mistakes

Submitting one combined, generic request covering interest, penalties and an informal payment plea in a single paragraph often makes it harder for the ATO to assess each element properly. It is usually clearer to separate the requests, even if they are submitted together.

Another mistake is assuming remission is granted the moment a request is lodged and relaxing repayment efforts as a result. Interest typically continues to accrue until a decision is made, and if remission is only partially granted, the remaining balance (plus any interest that accrued while the request was pending) is still owed.

Questions owners ask

Can remission wipe out an entire GIC balance? It is possible for the ATO to remit all or part of the interest depending on the circumstances, but there is no standard percentage or guaranteed outcome — each request is assessed on its own facts.

Does lodging a remission request stop debt recovery action? Not automatically. If the ATO is taking or considering recovery action, a pending remission request does not by itself halt that process — speak to the ATO directly about your account status.

Is professional help worth it for a remission request? A registered tax agent or accountant who understands your compliance history can often present a stronger, better-evidenced request than a generic self-prepared letter.

What if hardship, not a one-off event, is the real issue? Remission addresses interest specifically; broader hardship may call for a different conversation with the ATO about payment arrangements or, in limited circumstances, release from certain liabilities.

A general roadmap for pursuing remission

In the first stage, gather the facts: identify exactly which GIC or penalty amounts you are querying, the dates involved, and what evidence you can realistically obtain. In the second stage, prepare and lodge the request with your accountant’s help, keeping a copy of everything submitted and noting any reference number given.

In the final stage, follow up if you have not heard back within a reasonable time, keep paying down the underlying debt in the meantime since interest typically continues to accrue, and once a decision is made, update your records and your cash-flow plan to reflect the actual outcome rather than what you had hoped for.

Industry patterns the ATO may recognise

Certain industries experience recurring types of disruption that can be relevant context for a remission request — seasonal trading gaps in tourism and hospitality, weather-related disruption in agriculture and construction, or payment-cycle delays in sectors that rely heavily on large head contractors or government tenders. Referencing this context can help frame your specific circumstances, but it does not replace the need for your own dated evidence of what actually happened to your business.

Records worth keeping throughout the process

• Copies of both the GIC and penalty components of your request, kept separately.
• All supporting evidence with dates clearly visible or noted.
• ATO correspondence and any case or reference numbers.
• A record of payments made on the underlying debt while the request is pending.
• The final written outcome, including any conditions attached to a partial remission.

When the issue is bigger than interest and penalties

If, after reviewing the real numbers, the underlying tax debt is simply larger than the business can ever realistically repay from trading — regardless of what happens with remission — that is a different and more serious conversation. Signs this may be the case include needing to use new borrowing just to service old debt, consistently missing BAS or super guarantee obligations even after a payment plan is in place, or relying on personal funds to keep the business afloat month after month. In that situation, raise solvency directly with your accountant and consider a referral to a registered restructuring practitioner rather than continuing to focus on interest relief alone.

Describe the circumstances with a clear timeline

Record when the difficulty began, what changed and how it affected payment. Illness, interrupted trading, a major customer failure or another event may need different supporting evidence. Provide accurate details and avoid presenting a generic hardship story as your own. Your accountant can help connect the events to the relevant liabilities and periods.

Separate a temporary interruption from an ongoing shortfall. Identify essential costs, current income and what payment capacity realistically exists. A repayment proposal based on hoped-for sales can worsen distress if those sales do not arrive. Ask what assistance is available for your taxpayer type and debt rather than assuming every form of relief applies to a company.

Do not confuse remission with release of the principal

Interest remission concerns a charge on the debt; it does not necessarily reduce the underlying tax liability. Hardship release operates under separate legal rules. A decision not to pursue a debt is not necessarily the same as extinguishing it. Confirm precisely what is being requested, what remains payable and the effect of any decision.

Keep dealing with the payment position while a request is considered. Neither a request for relief nor a pending lending application should be assumed to stop recovery action. If a legal notice has arrived, have a lawyer confirm the deadline independently from any discussions about assistance.

Choose support that fits the underlying problem

A viable business with a short-term funding gap faces a different decision from a company unable to pay debts as they fall due. Formal restructuring involves legal eligibility and a registered practitioner; refinancing involves a new loan contract. One cannot be substituted for the other simply because the monthly payment looks more manageable.

Ask your accountant and appropriately qualified advisers to explain the options and consequences. ASBFEO’s debt support resources include pathways to independent help. If financial pressure is affecting your wellbeing, seek personal support as well as financial guidance. You do not need to sign a loan contract to begin asking for assistance.