Strategy to Overcome Changes to GIC and SIC Deductions

Chirag@XperTax
Mar 28
2 min read

With the removal of General Interest Charge (GIC) and Shortfall Interest Charge (SIC) deductions from 1 July 2025, businesses can take a proactive approach to minimize the financial impact and maintain cash flow stability. Here’s a strategic plan to navigate these changes effectively:

✅ 1. Improve Cash Flow Management

Set up a cash flow forecast to anticipate tax liabilities and payment deadlines.
Maintain a cash buffer to cover unexpected tax payments and avoid accruing interest charges.
Consider offering early payment incentives to customers to improve incoming cash flow.

✅ 2. Arrange Alternative Financing

Explore financing options with tax-deductible interest (e.g., business loans, lines of credit).
Negotiate with financial institutions for lower interest rates and favorable repayment terms.
Consider using invoice financing to access funds quickly without increasing debt.

✅ 3. Maximise Tax Efficiency

Work with a tax advisor to identify other deductible expenses to offset the increased tax burden.
Restructure debt where possible to ensure financing costs remain deductible.
Ensure that all eligible tax credits and incentives are fully utilized.

✅ 4. Minimise Late Payment Risk

Automate tax payment reminders to avoid missing deadlines.
Set up a direct debit arrangement with the ATO to ensure timely payments.
Engage with the ATO early if experiencing cash flow issues to negotiate payment plans.

✅ 5. Strategic Business Planning

Re-evaluate business operations to improve cost efficiency and reduce reliance on debt.
Diversify revenue streams to increase financial resilience.
Regularly review financial performance to quickly identify and address cash flow gaps.

💡 Pro Tip: Businesses with strong cash flow and low-interest debt will be better positioned to handle these changes. Working closely with a tax advisor to develop a tailored strategy will help mitigate the financial impact and maintain business stability.

If you’d like help preparing for these changes, reach out to XperTax today!