The main aim to charge interest is to make sure that taxpayers are paying correctly of their tax on time. A person who is paying their tax on time is more worthy than a person who pay less tax and giving incorrect returns even by mistake. There are two interest charge are described as follows:
General interest charge: This charge can be applied when the person not paying their tax on a date and it must be paid which includes when tax shortfall happens, when tax installment are underestimated, and when the return is given later.
Shortfall interest charge: This charge has a lesser rate than general interest charge because taxpayers, not having enough knowledge on the shortfall amount till the advise given by the ATO. When ATO tell about the shortfall in tax a person have to pay an interest charge for the shortfall amount.