If you’re required to lodge a return, report or statement with the Australian Taxation Office (ATO) by a particular day, but don’t, you may be liable to a failure to lodge (FTL) on time penalty.
The ATO outlines the key considerations around FTL penalties.
When will I receive an FTL penalty?
An FTL penalty may be applied for late lodgment of:
- Activity statements.
- Tax returns.
- FBT returns.
- PAYG withholding annual reports.
- Single Touch Payroll reports.
- Annual GST returns and information reports.
- Taxable payment annual reports.
FTL penalties are generally not issued in isolated cases of late lodgment. The ATO will warn you by phone or in writing if you’ve failed to lodge.
If you persistently miss lodgment deadlines and do not take action upon receiving warnings from the ATO, an FTL penalty may be issued. The ATO will send you a penalty notice stating the amount and due date of the penalty.
How is the FTL penalty calculated?
The penalty amount is calculated based on the size of the entity.
| Entity Type | Penalty Calculation |
| Small entity | 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. |
| Medium entity (a medium withholder for PAYG withholding purposes, or which has assessable income or current GST turnover of more than $1 million and less than $20 million) | The base penalty amount is multiplied by two. |
| Large entity (a large withholder for PAYG withholding purposes, or which has assessable income or current GST turnover of $20 million or more) | The base penalty amount is multiplied by five. |
| Significant global entity | The base penalty amount is multiplied by five hundred. |
Requesting a remission of the penalty
If you receive a penalty notice for failing to lodge a return or statement on time, you can ask for it to be remitted if you have a valid explanation for the late lodgment.
You can only request remission after the outstanding returns or statements have been lodged, and the request can be handled by registered tax agents and BAS agents.
Safe harbour from FTL penalty
If you engaged a registered tax agent or BAS agent to lodge your return or statement, you will not be liable for an FTL penalty if both of the following apply:
- You can show that you provided the agent with all relevant tax information to enable them to lodge the return or statement by the due date.
- The agent’s failure to lodge the return or statement was not because they were reckless or intentionally disregarded the law.
Key takeaways
If you are persistently late in lodging returns, reports or statements with the ATO, you may receive a failure to lodge (FTL) on time penalty which is calculated based on the entity size. If you believe the penalty was applied inappropriately, you can request remission. If you engaged a registered tax agent or BAS agent, you may have safe harbour from FTL penalty.
