ATO Interest now non deductible

From 1 July 2025 any interest you accrue on unpaid ATO accounts is non deductible.

The current interest rate accruing on ATO debts is 10.78%.

The recent change is part of a broader effort to discourage businesses and individuals from using the taxation system as a line of credit.

Whilst interest applied to overdue ATO accounts is now non deductible any interest you incur on a loan taken out with a bank to pay your ATO debts is deductible.

The aim is clearly to shift the liability and any recovery action for debts to institutions.

If you have ATO debt and would like to discuss financing options please contact our office so we can refer you to a finance broker.