ATO increases Late Lodgement Fines

ATO increases Late Lodgement Fines

The 2018 May budget included many notable and highly publicised tax amendments that impact almost all Australians. Little attention has been paid to the fact that the Commonwealth penalty unit increased from $180 to $210.

Also interesting is the fact that the Crimes Amendment (Penalty Unit) Bill 2017 now ensures the penalty unit value will automatically increase in line with CPI every 3 years from 1 July 2020.

How does this affect tax payers?

Tax law authorises the ATO to impose administrative penalties for conduct such as:

  • Failing to lodge a return or statement on time; and
  • Failing to meet tax obligations

The penalty amount is calculated using either a statutory formula or more commonly in multiples of penalty units.

Penalty unit

When infringement occurred

Penalty unit amount

Up to 27 December 2012


28 December 2012 – 30 July 2015


31 July 2015 – 30 June 2017


On or after 1 July 2017


The ATO publishes that the purpose of the penalty provisions are to encourage taxpayers to take reasonable care in complying with their tax obligations.

The above penalty units are multiplied by the penalty unit multiple amount. 

Example: Failure to Lodge (FTL) AKA Late Lodgment Penalties 

A penalty system applies penalty to late-lodged returns and statements, including:

  • activity statements
  • income tax returns
  • FBT returns
  • PAYG withholding annual reports
  • annual GST returns and information reports
  • taxable payment annual reports.

The ATO apply FTL penalties manually. This is usually in situations of escalating non-compliance – for example, where a taxpayer has not lodged after a request to do so.

As a rule, a penalty will not be applied to a late-lodged income tax return, FBT return, annual GST return or activity statement if the lodgment results in either a refund or a nil result, unless:

  • FTL penalty was applied before the return or statement was lodged (ie the penalty will not be remitted even if the subsequent lodgment results in a refund or nil result)
  • the unlodged item is a third-party data report, such as a taxable payments annual report.

For a small entity, FTL penalty is calculated at the rate of one penalty unit for each period of 28 days (or part thereof) that the return or statement is overdue, up to a maximum of five penalty units. For demonstration purposes small businesses incur penalties of one penalty unit per month that a BAS is outstanding. Therefore if one BAS is outstanding, and the business forgets to lodge the return until they realise the next quarter, it is common for penalties of ($210 * 3) $630 to be due payable.

Its important to ensure you know your obligations and due dates for compliance documents when running any sized business. For future details contact your GMD team member.

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