The Australian Taxation Office (ATO) released a notice on 27 March 2025 outlining updates to shortfall interest charges related to overclaimed tax offsets.
The government announced extending shortfall interest charges to repayments of overclaimed tax offsets. The amendment to the law is contained in the Future Made in Australia (Production Tax Credit and Other Measures) Act 2025.
Where an assessment of an entity’s tax liabilities is amended and, as a result, the amount of the tax offset for which the entity is eligible is reduced, the entity is liable to pay a shortfall interest charge on the excessive amount of tax offset they received.
These changes apply to assessments made on and after 1 April 2025. This measure is now law.
Announced measures
The Government announced it will amend the tax law to:
- Ensuring tax scheme penalties apply where taxpayers are in a loss position from 1 July 2026;
- Penalising large taxpayers that mischaracterise or undervalue interest or dividend payments, to which withholding tax would otherwise apply, starting from 1 July 2026.
These measures target gaps within the current tax penalty regime, improving tax compliance and the integrity of the tax system and strengthening the disincentives for tax avoidance.
These measures are not yet law.
