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ATO releases guidance on denying deductions for ATO interest

A recent change in the law means that from 1 July 2025, general interest charge (GIC) and shortfall interest charge (SIC) will no longer be tax deductible.  Any interest incurred before this date remains deductible.

The ATO has released a fact sheet, "Denying deductions for ATO interest", to explain when GIC and SIC are considered “incurred”. This occurs when there is an existing liability to pay.  For instance, following an amended income tax assessment, the due date for payment is 21 days after the notice is issued, with GIC accruing after that deadline.  For running balance account (RBA) deficit debts, GIC is incurred daily.  The fact sheet includes multiple examples covering situations such as amended assessments, late lodgment, and RBA deficits.

Importantly, the legislative change does not affect the Commissioner’s power to remit interest.  The ATO’s remission policy also remains unchanged, and taxpayers can still apply for remissions where appropriate.  Whether remitted interest is assessable depends on whether a deduction was previously available, remitted charges will only be assessable if the original interest was deductible.

Denying deductions for ATO interest | Legal database

Developer’s valuation of property sold under margin scheme rejected

A property developer was unsuccessful in challenging the Commissioner’s calculation of GST liabilities for large-scale  developments under the margin scheme.

Facts

The developer acquired land from the ACT Suburban Land Agency (SLA) in 2015 and 2017, providing both cash and development services as consideration.  In return, it received short-term leases, later converted to 99-year leases for sale to residential buyers.

Applying the margin scheme, the developer valued its non-monetary consideration (the development services) using land valuations based on expected sale prices of the 99-year leases, less the cash paid to SLA.  It then issued tax invoices to SLA, including $16.3 million in GST, which SLA paid between September 2017 and November 2018.

Decision

The ART upheld the Commissioner’s position, ruling that the developer had not proven the amended assessments were excessive.  It found the $16.3 million paid by SLA counted as consideration under the margin scheme.  The Tribunal also ruled that a private ruling obtained by the developer did not compel the Commissioner to accept its valuation, and that the methodology used, valuing land by reference to future 99-year lease sales, had an “air of unreality”.

ZKSM and Commissioner of Taxation (Taxation) [2025] ARTA 1298 (11 August 2025)

TPB unveils its corporate plan for 2025-26

In its 2025–26 plan, the Tax Practitioners Board (TPB) has outlined four main areas of focus aimed at strengthening the tax profession.

The TPB’s priority will be to safeguard the integrity of the profession through a fair, proportionate, and data-driven compliance program, while continuing to support both practitioners and the public.  Enhanced data analytics will play a central role, with compliance efforts directed at unregistered preparers, tax scheme promoters, and cases of professional misconduct.  These priorities are guided by more than 14,000 complaints and referrals received last year, along with intelligence from the ATO and other agencies.  To encourage transparency and voluntary compliance, the TPB will also publish its compliance priorities.

The plan further highlights broader risks, including regulatory gaps, data governance, cyber security, and technology challenges, and sets out the TPB’s overarching strategy for addressing them.

TPB Corporate Plan 2025–26 | Tax Practitioners Board