What actually changed
The Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 removed the deduction for ATO interest charges. Any GIC or SIC incurred on or after 1 July 2025 is not deductible, regardless of which income year the underlying debt relates to. (ATO — Denying deductions for ATO interest charges)
Three details matter:
- It's the date the charge is incurred, not paid, that counts. GIC that accrues from 1 July 2025 onward is non-deductible even if the tax debt arose in an earlier year. (ATO media reminder)
- Interest incurred before 1 July 2025 keeps its deductibility. Only charges from the cut-off date forward are affected.
- Remission rights are unchanged. You can still ask the ATO to remit GIC; the law on remission didn't move.
What is GIC? The General Interest Charge is the interest the ATO applies to unpaid or underpaid tax. The Shortfall Interest Charge applies specifically to a tax shortfall identified after an amendment. Both compound daily, and from 1 July 2025 neither can be claimed as a deduction.
Why this matters specifically for R&D claimants
The R&D Tax Incentive is a self-assessed program. You register activities, claim the offset, and the ATO and AusIndustry can review the claim afterwards — sometimes years afterwards. If a review leads to an amendment that reduces your offset, the result is a tax shortfall, and that shortfall carries interest.
Until 30 June 2025, that interest was at least deductible, which partly offset the cost. From 1 July 2025, it isn't. The downside of a claim that doesn't hold up under examination is now larger in after-tax terms.
To put the scale in context, the offset itself is significant:
| R&D entity (by aggregated turnover) | Offset type | Rate |
|---|---|---|
| Under A$20M | Refundable | Company tax rate + 18.5% premium (i.e. 43.5% at the 25% base rate) |
| A$20M or more | Non-refundable | Company tax rate + 8.5% or 16.5% intensity premium |
Source: ATO — Rates of R&D tax incentive offset.
When the benefit is this material, an amendment is material too — and the interest on it is now a pure, non-deductible cost.
Before vs after 1 July 2025
| Before 1 July 2025 | From 1 July 2025 | |
|---|---|---|
| GIC on a tax shortfall | Deductible | Not deductible |
| SIC after an amendment | Deductible | Not deductible |
| What determines treatment | — | Date the charge is incurred |
| Net effect of a disallowed R&D position | Interest cost, partly offset by deduction | Interest cost, no deduction |
The mechanics didn't get more complex. The cost of getting a claim wrong did.
The defensible-documentation response
You can't control whether your claim is selected for review. You can control whether the evidence behind it was created at the time the work happened.
The ATO and AusIndustry have consistently stated that R&D entities should keep contemporaneous records — records made around the time activities are planned and conducted — because they are the strongest evidence under review. This expectation has been tested and upheld at the Administrative Appeals Tribunal, including in Tier Toys Limited v FC of T [2014] AATA 156 and Ozone Manufacturing Pty Ltd v FC of T [2013] AATA 420. (ATO — Helping you get R&D claims right; business.gov.au — Assess if your R&D activities are eligible)
Contemporaneous records typically show, for each activity:
- The technical hypothesis or unknown you set out to resolve.
- The experiments run and iterations attempted, dated as they happened.
- The results and how they informed the next step.
- The link between the activity and the expenditure claimed against it.
Documentation assembled retrospectively at claim time is permitted, but it carries less weight precisely when weight matters most — during an examination. The interest-deductibility change is one more reason to close that gap before lodging, not after a query lands.
Dossio is infrastructure for exactly this: capturing R&D evidence in structured, dated, audit-ready form as the work happens, with R&D tax experts providing oversight and governance.