The Australian Tax Office (ATO) are automatically identifying, calculating, and paying Interest on Early Payments (IEP) from March 2022. The process applies to eligible early payments made from 1 July 2021.
You may receive IEP when you make payments towards any of the following liabilities more than 14 days before the due date:
For eligible payments made:
The payments will be made into the nominated account for your regular ATO refunds. You should ensure your financial institution details are up to date.
If you have an existing tax debt, your IEP entitlement will be offset against the debt and any excess IEP amount will be paid.
The following payments are not eligible for IEP:
Interest on early payments is assessable income and needs to be included in your tax return in either the:
For the 2021/22 financial year the interest rates used for calculation of early payments is:
|Period||Interest rate (% pa)|
|1 July 2021 to 30 September 2021||0.04|
|1 October 2021 to 31 December 2021||0.01|
|1 January 2022 to 31 March 2022||0.04|
|1 April 2022 to 30 June 2022||0.07|
Interest on early payments is assessable income.
For individuals, IEP amounts will be prefilled in your income tax return and shown in the Income Tax Prefill Reports.
Include any IEP in your tax return in either the income year you receive the interest payment, or the income year it is offset against another tax debt you had with the ATO.
If you would like any help navigating interest on early payments, please contact us.