| General interest charge (GIC) rates |
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On 1 July 1999, the penalty arrangements for late payment and other obligations were streamlined with the introduction of a uniform tax deductible general interest charge (GIC). The GIC replaced a complex system of interest and penalties we imposed for late payments. Section 8AAD of the Taxation Administration Act 1953 specifies how the rate of the charge is calculated. To work out the daily rate, divide this rate by the number of days in a calendar year. From 1 July 1999 to 30 June 2000, the GIC was based on the relevant 13-week Treasury Note rate plus eight percentage points. In June 2000, the Australian Office of Financial Management announced that fixed term Treasury Notes, including the 13-week Treasury Note, would no longer be issued. Due to this, the GIC rate of 13.86% remained fixed from June 2000 until the new legislative basis, the 90 day Bank Accepted Bill rate and a reduced uplift factor of 7% was adopted from 1 July 2001. During the 2000 financial year, the GIC daily compounding rate only applied to pay as you earn, the prescribed payment system, the reportable payment system and sales tax with a simple interest rate applying to other taxes. However, the GIC compounding rate now extends to most taxes, including:
The GIC is updated quarterly (refer table below) with rates for the next quarter generally announced two weeks before the start of that quarter.
**Although the GIC rate for the January-March quarter has slightly decreased, the daily compounding rate has increased. This is because 2004 was a leap year and the daily rate for each quarter in 2004 was calculated by dividing by 366 instead of the usual 365. Newer news items:
Older news items:
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