Tax agent: from GIC to refund

A tax agent approached us on behalf of a client who had been charged approximately $30,000 in General Interest Charges (GIC) by the ATO. The agent believed these charges were unfair.

Due to incorrect income reporting in the client’s 2022 tax return, the ATO reclassified the client as a medium business taxpayer instead of a small business. This reclassification brought the lodgement due date forward from 15 May to 15 January.

Although the tax agent obtained a lodgement deferral for the 2023 income year, they were unaware that a separate payment deferral was required. As a result, the ATO imposed significant GIC.

The agent tried to resolve the matter directly with the ATO, lodging two complaints. They argued that if the ATO considered the corrected 2022 income, the client would remain a small taxpayer, meaning the original due date of 15 May should apply—and the GIC should never have been charged. The ATO rejected this argument and further stated that, because the GIC had already been paid, it could not be ‘remitted’.

We reviewed whether the ATO had properly considered the circumstances. During our investigation, we identified an ATO audit position that agreed with the client’s corrected 2022 income. Using this information, we persuaded the ATO that, based on its own audit findings, the lodgement date of 15 May should apply. Therefore, as a matter of fairness, a ‘refund’ of $30,000 in GIC was appropriate. The ATO agreed, and the client received a full refund of the GIC.