In the lead up to the Parliament considering the Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024, which includes the measures to make GIC and SIC incurred from 1 July 2025 non-deductible, CAANZ with the other accounting bodies (the bodies) provided a brief to the cross bench members.

In the brief, the bodies stated that the proposal to permanently deny deductions for GIC and SIC represents a punitive measure that risks exacerbating financial hardship for small businesses already facing challenges such as high inflation, elevated interest rates, and cash flow constraints. By making these interest costs on tax debts non-deductible, the proposal risks accelerating the accumulation of tax liabilities of small businesses to unsustainable levels, potentially threatening the viability of many small businesses. 

Making GIC and SIC non-deductible penalises taxpayers who have historically ‘done the right thing’ or, through no fault of their own, accrue these charges due to legitimate tax disputes or administrative delays.

The brief requested that this amendment be removed from the Bill for greater consultation in the second half of 2025 or that the start date of this measure be deferred to 1 July 2027 to allows small business to better plan for these changes.

Following the brief, Senator for the ACT David Pocock, proposed an amendment to the Bill so that all small businesses continue to be able to claim deductions for incurred GIC and SIC. Unfortunately, due to Parliamentary time constraints, and to ensure there was time to pass the $20,000 instant asset write off legislation, he eventually withdrew his proposed amendment.

CA ANZ will continue to advocate for both GIC and SIC to be deductible.