ATO GIC vs Business Loan Interest: What Should You Compare?

Comparing ATO GIC with business-loan interest looks simple until the repayment schedules are placed side by side.

For July to September 2026, the ATO's published GIC rate is 11.43% per annum, calculated using a daily rate of 0.03131507%. A business lender may quote a rate below or above that figure.

The lower headline rate does not automatically produce the lower total cost.

Start with the current ATO GIC

The ATO changes the GIC rate quarterly. GIC applies to unpaid tax amounts and is worked out daily. Because it is charged to the account over time, the cost grows while the balance remains unpaid.

For the July to September 2026 quarter:

• GIC annual rate: 11.43%
• GIC daily rate: 0.03131507%

The next quarter can be different, so a comparison should use the current ATO rate rather than a figure copied from an old article or spreadsheet.

Then compare the loan on the same basis

A business loan has more moving parts than the advertised interest rate.

Include:

• interest rate
• establishment fee
• monthly or annual facility fees
• repayment frequency
• loan term
• whether the rate is fixed or variable
• security costs, where relevant
• early repayment conditions

A 9.5% loan over 36 months can cost more in total than an 11.43% ATO plan cleared over 24 months simply because the commercial debt remains outstanding longer and carries fees.

That does not make the loan worse. It may deliver a lower monthly repayment and therefore better operating cash flow. The decision depends on which constraint matters most to the business.

Worked example: $100,000 of ATO debt

Using an illustrative $100,000 balance:

ATO payment plan

• 11.43% annual GIC
• 24-month term
• no upfront payment
• estimated monthly repayment about $4,683
• estimated GIC over the period about $12,398

Illustrative business loan

• 9.50% annual rate
• 36-month term
• $1,500 establishment fee
• $25 monthly facility fee
• estimated loan repayment about $3,203 per month
• estimated interest about $15,319
• total establishment and monthly fees $2,400

In that example, the business loan produces a lower monthly payment but a higher direct financing cost because the debt runs for longer and includes fees.

The numbers change quickly when rate, term or fees change. Run your own assumptions in the ATO payment plan vs business loan calculator.

Tax treatment changed the comparison from 1 July 2025

ATO GIC and SIC incurred on or after 1 July 2025 are not deductible.

Interest on a separate business borrowing may have different tax treatment depending on the borrower, the tax liability and use of funds. That treatment should be confirmed by a registered tax adviser before you use an after-tax loan cost.

Read Is ATO GIC Tax Deductible in 2026? for the detail and ATO sources.

Monthly repayment can matter more than total interest in the short term

A business can choose the cheaper total-cost option and still create a cash-flow problem if the repayment is too high.

That is why the calculator shows both total direct cost and monthly repayment.

If the ATO plan requires $4,683 each month but the business can sustainably afford only $3,500 after current tax obligations, the fact that the ATO plan is cheaper in total does not make that schedule safe.

Conversely, extending the debt to five years simply to lower the repayment can create a long tail of interest cost.

The structure needs to fit actual cash generation.

What about future borrowing?

There is another cost that does not sit neatly inside an interest-rate calculation.

If the business expects to need a bank overdraft, equipment finance, trade facility or working-capital line before the ATO debt is cleared, the outstanding tax position may become part of that lender assessment.

That does not mean refinancing is always better. It means the value of clearing the ATO balance may include finance readiness, not just direct interest savings.

Read Can an ATO Payment Plan Affect a Business Loan Application? for the credit-assessment side.

A six-part comparison that actually works

Before deciding, put both options into one table and compare:

1. Total direct financing cost over the full term
2. Monthly repayment and cash-flow buffer
3. Time to clear the debt
4. Fees and security attached to the commercial option
5. Confirmed tax treatment of lender interest
6. Future borrowing needs while the ATO balance remains outstanding

For businesses considering a lender solution, see Business Loan With ATO Debt.

Frequently Asked Questions

What is the ATO GIC rate for July to September 2026?

The ATO publishes an annual GIC rate of 11.43% and a daily rate of 0.03131507% for July to September 2026.

Is a business loan cheaper if its rate is below the ATO GIC rate?

Not necessarily. Establishment fees, ongoing fees and a longer loan term can make the total dollar cost higher even when the headline rate is lower.

Is ATO GIC deductible in 2026?

GIC incurred on or after 1 July 2025 is not deductible.

What is the most useful way to compare the two options?

Compare total direct cost, monthly repayment, term, fees, security, confirmed tax treatment and any impact of carrying ATO debt into future finance applications.

Official sources

• ATO: General interest charge rates
• ATO: Denying deductions for ATO interest charges
• ATO: Payment plan estimator

Further Reading

• ATO Payment Plan vs Business Loan Calculator
• Is ATO GIC Tax Deductible in 2026?
• Can You Refinance ATO Debt With a Business Loan?

GPS Finance Group (CRN 000575797) is an Authorised Credit Representative of AFAS Group Pty Ltd (ACL 414426). AFCA Member ID 119860. General advice only. Consider whether this information is appropriate for your circumstances. Tax and legal questions should be discussed with a registered tax adviser or lawyer.