Newsletter; ATO interest deductibility, Borrowing to pay an income tax debt & ATO debt
ATO interest deductibility
From 1 July 2025, general interest charged by the ATO is not able to be claimed as a tax deduction (this legislation was passed by Parliament at the last sitting before the election was announced).
Borrowing to pay an income tax debt
Generally, a company and individual who operate a business are able to claim a tax deduction for interest on loans used to pay income tax debt. Individuals who receive income from employment and other sources (including business trust and partnership distributions) are not eligible to claim interest on borrowings to pay an income tax debt as a tax deduction.
ATO debt
During covid, the ATO stopped chasing debt and handed out $89b of JobKeeper subsidies.
Post covid, ATO debt soared over $51b with $34b owed by small businesses.
Since 2022-23, the ATO has relied on Director Penalty Notices to collect debt (26,702 issued in 2023-24).
