ATO Debt Changes from 1 July 2025
Big changes are on the way for business owners with outstanding ATO debt. From 1 July 2025, interest charges on ATO debts may no longer be tax-deductible — which could increase the cost of carrying that debt.
While we’re not here to provide tax or accounting advice, we believe this is an important change to be aware of, especially as EOFY planning ramps up.
February Newsletter
What’s Changing?
Right now, if your business has an outstanding ATO debt, the interest you’re charged (known as General Interest Charges or GIC) may be tax-deductible — reducing the overall impact on your taxable income.
But under proposed changes in the 2024–25 Federal Budget, that deductibility may be removed from 1 July 2025.
That means:
- Tax time could get more expensive if you have overdue obligations
- Businesses may no longer be able to claim ATO interest as a deduction
- Holding onto ATO debt could increase your taxable income
Why This Matters
If your business is carrying ATO debt — even if it’s being managed through a payment plan — the real cost of that debt could rise significantly once deductibility is removed.
For businesses managing tight cash flow or already stretched by other obligations, this could put more pressure on end-of-year financials.
What Can You Do?
Now is the time to start planning. Here are a few proactive steps you might consider:
📆 Review your position before EOFY — don’t leave it too late to take action
📝 Check in with your accountant to understand how this change could affect your specific circumstances
💬 Explore short-term finance or cash flow solutions if paying down ATO debt is a priority
We’re Here to Support You
At Money Solutions, we’re not offering tax advice — but we do want our clients to stay informed so they can make confident, timely decisions.
If you’d like to explore your business finance options to help manage ATO debt or improve cash flow, our team is here to help.
📞 Get in touch with us for a friendly, obligation-free chat.
Disclaimer
This blog post provides general information only and is not financial or tax advice. Your full financial situation and requirements should be considered in consultation with a qualified adviser before making any decisions.
March Newsletter