The ATO’s GIC problem just got an official diagnosis.
The Tax Ombudsman’s March 2026 report “In the interest of fairness” is the most detailed examination of GIC remission ever published. The findings should concern every practitioner with clients carrying tax debt.
The numbers
Unpaid GIC balances increased 185% between 2019 and 2025, nearly double the 94% rise in uncontested tax debt over the same period. GIC now represents 18% of all collectible debt, up from 13% in 2019. The ATO imposed 123% more GIC over that period, but remissions grew only 90% (p 4).
In FY2025, 126,000 remission requests were made with 96,000 granted, but refusals doubled year-on-year (p 4).
Approval rates dropped 12 percentage points after the ATO’s June 2023 shift from “help and assist” to “pay now and pay in full” (pp 7, 17).
Only 0.6% of taxpayers even sought remission in 2024 (p 4). Most don’t know they can ask.
The system
Section 8AAG of the Taxation Administration Act 1953 gives the Commissioner discretion to remit GIC on four grounds: delay not caused by the taxpayer; delay caused but fair to remit; special circumstances; or otherwise appropriate (pp 24, 55).
But the ATO’s own 2024 internal review revealed 77% of phone-based remission decisions were non-compliant with its guidelines and 42% didn’t even consider the cause of delay (p 25). Further, officers may miss the “special circumstances” ground because it sits at the end of internal guidelines (p 41).
Large businesses had an 84% approval rate versus 75-77% for individuals and SMEs (p 4). Decision letters relied on generic template paragraphs so formulaic that taxpayers complained they appeared AI-generated (p 44). There is no merits-based review. The only option is Federal Court judicial review, examining process, not whether the decision was correct (p 45).
The practitioner takeaway
1. GIC compounds daily, even during payment plans. One case: a $41,000 debt led to GIC of $275,000+ over 20 years (p 29). Another: $400,000+ in GIC on GST actually paid on time because BAS was lodged late (p 28).
2. GIC became non-deductible from 1 July 2025, increasing the effective cost (p 18).
3. PS LA 2011/12: the practice statement on GIC remission hasn’t been updated since 2015 (p 22).
4. The ATO now administratively accepts reconsideration requests where the taxpayer identifies an error or has new information, with no limit on requests (p 46).
5. Interest-free payment plans exist for certain small businesses but only 7% of taxpayers and 17% of tax professionals understand the eligibility requirements (p 25).
The Ombudsman made four recommendations covering, broadly: post-implementation review, partial remission, decision-making consistency and clearer decision letters. The ATO agreed to all (pp 51-53). Whether that translates to cultural change remains the real question.
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.