💡Key Insight
- If you don’t lodge your tax return on time, the Australian Taxation Office can impose a Failure to Lodge (FTL) penalty that increases for each 28-day period the return remains overdue, potentially accumulating significant fines.
- Late tax returns may result in interest charges on any unpaid tax liability, increasing what you owe over time and adding financial cost beyond the original tax debt.
- Missing the deadline without valid reason can trigger ATO compliance actions, including warnings, firmer enforcement steps, or default assessments that estimate your income and tax owed if you fail to lodge.
- Even if you think you’re not required to file, failing to lodge or submit a non-lodgement advice may lead the ATO to treat you as overdue, potentially subjecting you to penalties and enforcement measures.
31 October is supposed to be scary because it’s halloween, but the real thing to watch out for is that it’s also the date by which you have to lodge your tax return. Your tax return may be for just your individual income, or the income that’s included from your business. For companies, the due dates tend to be in the early months of the following year, think January to May. Either way, the ATO are strict about enforcing these deadlines – so don’t leave it to the last minute.
So what happens if you miss this date? Here we will list some of the consequences of not lodging your tax return on time and exemptions to this.
Penalties
If 31 October passes and you haven’t lodged your tax return you will receive a Failure to Lodge (FTL) penalty. The first penalty is a fine for $210, but these sharply increase as time goes on. For each 28 day period afterwards that you don’t lodge, you will be fined a further $210. The maximum amount you can be fined is $1,050 – but you don’t want to let it get to that stage. It is also a general rule that the ATO won’t issue you with an FTL penalty if your tax return doesn’t result in you owing any tax to them (but rather you get a refund or the amount is balanced). However, this isn’t guaranteed and you will need to contact a tax lawyer to determine if you’ll be made to pay the FTL fee.
Interest
If you have an unpaid tax liability, then the ATO will charge you interest on the amount owing. The rate currently sits at 8.96% per annum but these rates increase over time. If you don’t pay within a reasonable amount of time, the interest charged on your tax liability will quickly increase your tax debt.
Options if you miss the deadline
If you can’t make the deadline, you’re not doomed to be fined, or to pay interest on any tax liabilities you may have. Here are some ways you can be exempt from paying the late fee:
Applying for an extension
You can apply for an extension of the 31 October deadline if you have no pre-existing debts with the ATO, have no child support or Centrelink payments owing and your history of complying with ATO deadlines and requirements.
The safe harbour provision
You can claim an exemption to the FTL penalty if an accountant or tax agent was hired to lodge your tax return. This applies if you gave the agent or accountant all the necessary tax information and they did not act recklessly or intentionally disregard the law.
Non-lodgement advice
If your income was under the threshold from the period 1 July 2017 to 30 June this year, then you won’t generally have to pay any income tax. However, it is recommended that you still lodge a Non-Lodgement Advice form just in case the ATO has you on their records as owing a tax return and then takes measures to make you comply. Further, if you operate a business as a sole trader, you need to lodge a tax return regardless of whether or not your income is above the $18,200 threshold.
Have more questions? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.
