Brokers need to act swiftly as significant changes to ATO interest charge deductions are on the horizon. Starting from the income year beginning on 1 July 2025, the government will disallow tax deductions for interest charges levied by the Australian Taxation Office (ATO), specifically general interest charge (GIC) and shortfall interest charge (SIC).
This measure will mean that taxpayers, including business owners, will no longer be able to claim a deduction for GIC and SIC incurred on or after this date.
Many business owners are feeling the squeeze with the ATO ramping up its collection efforts. But it’s good to know that there are solutions available. We offer a range of flexible commercial lending options designed specifically for SMEs to help them refinance existing debts, manage ATO liabilities, or consolidate other financial obligations.
One key offering from non-bank lenders is the ability to refinance debt, including those owed to the ATO. This includes offering higher loan-to-value ratios (LVRs) and providing alternative assessments of business income and assets. These flexible criteria can enable business owners to secure finance when traditional lenders are unable to meet this need.
To us, it’s key to look at a business’s overall financial health rather than just the numbers on paper. This allows us to offer higher LVRs for commercial loans, which is particularly helpful when businesses are dealing with ATO debts or other financial obligations. We work with SMEs to understand their situation and create solutions that give them the breathing room they need, while positioning them for future growth.
Brokers have an opportunity to get on the front foot and encourage their business clients to act now before the change takes effect on 1 July.
Together with a tax professional, help your clients navigate whether paying off tax debt with a loan is appropriate for their situation.
Find a lender with loan options that allow customers to consolidate their ATO debt, enabling them to potentially place the debt on their balance sheet and claim deductions.
While not yet law, this change is expected to take effect from 1 July 2025, affecting accrued or incurred interest charges and those under existing payment arrangements.
Pepper is committed to providing innovative financial solutions that meet the evolving needs of our clients. Our ATO debt consolidation service is designed to offer practical benefits and support financial stability, making it an ideal choice for those looking to optimise their financial strategies.
