How to Escape from Late Tax Return Penalties


Unless you fall in the tax-exempt category or are below the tax-free threshold in Australia, it is necessary to lodge a tax return. It applies even if you have incurred a loss in your business. Failure to lodge your tax return can lead to strict penalties, interest, and fines. Because the Australian Taxation Office works with a robust data matching system, it is pretty easy for them to catch up with you. However, there are several ways to escape from these penalties. For example, you may hire a professional late tax return accountant to help you. Read this post to learn about it in detail.

What Will Happen if You Have Not Lodged Your Tax Return?

If you have not lodged one to two tax returns, the ATO will take the necessary action against you.

  • Failure to lodge a tax return within time sometimes leads to ATO prosecutions. The maximum penalty associated with a trial is a hefty fine of $9000 and 12-month imprisonment. But, the ATO hardly decides to prosecute an individual.
  • Late tax return lodgement also results in an audit by the ATO.

To avoid this, you must lodge your tax returns as soon as possible.

Appointing a professional tax return consultant can make the whole matter less painful. They will check if there is any possibility to remit the penalties.

If your income information is missing, the consultant can obtain pre-filled information sent by employers and banks to the ATO. In addition, they can also work on your behalf and answer questions raised by the ATO in an audit.

How Late Can You File Your Tax Return?

Most Australian taxpayers must file their tax returns by the 31st of October each year. Even if you are not required to pay tax, you must notify the ATO by October 31.

Extended deadlines for filing tax returns are given to tax accountants and agents. If you employ a professional to file your tax return, the deadline is the 15th of May the following year.
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However, it will be determined by the type of tax return.

What Is the Penalty Amount for a Late Tax Return Submission?

If you fail to lodge your tax return by the required date, you will be charged a Failure to Lodge (FTL) penalty.

A penalty unit is equivalent to 28 days. In a single calculation, a maximum of five penalty units can be considered. Because the current fine for one penalty unit is $222, the maximum penalty amounts to $1110.

The punishment is usually applied automatically. Returns that result in a refund or a nil outcome, on the other hand, are not subject to automatic penalties. If the penalty is found to be fair and reasonable by the ATO, it may be remitted. Severe diseases and natural disasters are two prominent occurrences that may result in remittance.

What Is the Current Interest Rate on Late Tax Return Lodgements?

If your outstanding tax return leads to additional income tax payable, a GIC (General Interest Charge) will be applied. It is updated quarterly. The annual rates for each quarter of the current financial year are as follows.

  • July to September 2021: 7.04%
  • October to December 2021: 7.01%
  • January to March 2022: 7.04%
  • April to June 2022: 7.07%

Does Late Lodgement Penalty Apply even if No Tax Is Due?

If you do not file your tax return by the due date, you will face a penalty. It does not apply even if no tax is owed.

It means you’ll have to pay more in penalties and fines than in taxes. As a result, it is always advisable to begin preparing your tax return as soon as possible.

How Can You Escape from Late Tax Return Penalties?

If you have failed to lodge your tax return before the deadline, it is better not to solve the issue on your own. While you have the option to lodge your tax return online using the MyGov portal, you will face a range of issues. The best thing you can do is hire a tax accountant who has years of experience handling late lodgement issues.

They can help you in the following ways.

  • They have relevant knowledge and experience to check your circumstances to determine if there is an option to waive or reduce the penalties and interest.
  • They can also negotiate payment arrangements with the ATO regarding the tax liability. It will benefit your cash flow.

Many tax accounting firms in Australia provide a wide range of tax-related services to many clients. For any help, you may book your consultation with the agents.

Can the ATO Reduce the Penalties?

After you have filed all overdue statements and returns, the ATO may consider waiving or lowering the interest rates and penalties in certain circumstances. The following are the situations in which your penalty may be reduced.

Your tax return will result in a refund.
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You are dealing with major domestic or personal problems that are out of your control.

You’re battling a serious illness.

You have been caring for someone who has a serious illness.

A natural disaster has impacted your financial situation.

In addition to these common circumstances, the ATO may consider other appropriate circumstances to be reasonable and fair.


Why Is It Important to Submit a Non-Lodgement Advice to the ATO?

In Australia, an individual earning less than $18200 does not need to lodge a tax return. But in that case, it will be vital for them to submit non-lodgement advice to the ATO. This document ensures that they do not require to lodge the return.

If you are one of them, make sure to submit it before the deadline. Without it, the ATO will assume that you are entitled to lodge a tax return and take action when you do not file it.


Professional tax accountants and agents have the necessary skills and knowledge to offer you the best help. They can quickly prepare the tax returns for your outstanding years because they have access to your tax records and lodgement history. With their assistance, it will be much easier to receive your refund. So, whenever you are lodging tax returns late, approach a reputed tax accounting firm.


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