GIC may be applied in various scenarios, including late payments, tax shortfalls because of amendments, or underestimation of tax instalments.
A Shortfall Interest Charge (SIC), that has a lower rate than the GIC, but may also be applied and must be paid within 21 days after notice is given.
Once the due date has passed, GIC applies to any unpaid tax and SIC, according to the ATO.
Some BAS agents may feel they have a case for requesting a remittance of GIC if the delay in payment was beyond their control, says Bushnell. “In these cases, the ATO will consider how circumstances prevented on-time payment and what steps were taken to reduce the delay.”
Be aware, though, that these circumstances are far from trivial. Reasonable grounds may include natural disaster, industrial action, the unforeseen collapse of a major debtor or the absence of key staff because of sudden illness.
“In cases where the BAS agent feels they were responsible for the delay, they may still request a remittance,” says Bushell. “However, they must have documents that provide evidence to support their request.”
SIC may also be remitted if an ATO examination caused the delay, or the BAS agent was unable to obtain essential information from a third party during the examination.
Watch this space
- Disqualified Entities: The Tax Practitioners Board (TPB) has implemented reforms concerning disqualified entities, says Bushnell. Specifically, TPB Code items 15 and 16 state that a registered tax practitioner must not provide tax or BAS agent services in connection with an ‘arrangement’ with an entity they know or ought to reasonably know, is disqualified.
- Breach Reporting: From July 1, a registered tax practitioner is required to supply the TPB with written notification if they think they have reasonable grounds to believe they may have breached the Code of Professional Conduct and that breach is a significant breach. They are also required to report on another tax practitioner. This is a huge issue for our members because the legislation has been passed with no explanatory memorandum and the TPB is now charged with coming up with guidance,” says Bushnell. As we go to print, the TPB is yet to finalise their guidance on Breach Reporting
- Client to Agent Linking: The process by which a client selects and uses a BAS agent has become more time consuming because of the multiple steps required. In a move designed to tighten up on client consent (previously client consent was not required), clients must now attach their ABN to their mygovid, go online to services for business, type in the BAS agent’s registration number and nominate them as their agent, says Bushnell. “Some clients are finding the process too hard and are resisting having to complete all the steps required.”
On the radar
- Pay Day Super: Business can currently pay superannuation to employees quarterly. However, the Federal Government has announced that it intends to require compulsory super contributions to be made at the same time that wages and salary are paid. The date this is slated for is July 1, 2026. This is likely to create cash flow issues for clients, says Bushnell.
1 The Government have indicated their future intentions for the GIC to not be tax deductible.
Find out more about how IPA supports registered BAS agents.
