Penalties for Late Lodgement
February 2006

The Australian Tax Office (ATO) has stepped up its issuing of penalties for late lodgement of certain tax documents. Technically known as a 'failure to lodge on time (FTL) penalty', this is automatically applied if an 'approved form' which is required to be sent to the tax office by a due date is not received by that date. Approved forms include income tax returns, annual goods and services tax (GST) returns, PAYG summary statements and installments or activity statements (IAS and BAS).

The penalty issued still applies even if the document is eventually lodged and we have seen the prevalence of penalties increase in recent months.

There are occasions when the FTL penalty will not be applied. Generally, the tax office will provide a verbal or written warning prior to issuing a penalty and in most circumstances penalties will not be applied if the late lodged income tax return, annual GST return or statement results in a refund, minimal debt or nil assessment. However, if the penalty has already been automatically applied, just because the lodgement may result in a refund or a nil assessment is not enough reason for the penalty to be remitted.

The best advice is to not get caught up with a FTL penalty through a late lodgement. Most businesses and individuals can ill afford the extra cost of these penalties from the ATO and they range in size from $110 for a short delay with a small taxpayer to $2,750 for longer delays in higher tax payers. Invariably those lodging documents late also have not paid on time. The Taxation Office then charges interest in the unpaid amount. These fines are not tax deductible however the interest charges are.

Don't get caught out - if you need to discuss this with a professional, contact us. We can prepare and lodge your returns and statements so there are no issues with penalties. We can also provide advice in situations where penalties have been charged, or where you believe you will be unable to lodge an approved form by the due date and discuss alternative arrangements with the ATO.