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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?

In Australia, most taxpayers must lodge their tax returns by 31 October each year. Even if you are exempt from paying tax, make sure you inform the ATO about it by 31 October.

Tax accountants and agents get extended deadlines for tax return lodgements. So, if you hire a professional to lodge your tax return, the deadline will be 15 May of the following year. But it will depend on the type of tax return.

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

A Failure to Lodge (FTL) penalty will be issued when you fail to lodge your tax return by the due date.

One penalty unit equals 28 days. A maximum of five penalty units can be considered in one calculation. Because the current fine amount for one penalty unit is $222, the amount of maximum penalty stands at $1110.

Usually, the penalty is applied automatically. But, returns generating a refund or a nil result are not subject to automatic penalties. The ATO can remit the penalty if they find it fair and reasonable. Severe illnesses and natural disasters are some of the common events where you may receive a 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?

A penalty will be imposed if you do not lodge your tax return by the due date. It does not apply even if there is no outstanding tax.

It means that you will pay more in penalties and fines than taxes. So, it is always good to start preparing your tax return early.

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 returns 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?

In specific circumstances, the ATO may consider remitting or reducing the interest rates and penalties after you have filed all overdue statements and returns. Following are the cases where you can receive a reduction in your penalty.

  • Your tax return generates a refund.
  • You are going through major domestic or personal emergencies that are not in your hands.
  • You are fighting a severe illness.
  • You have been caring for someone who is sick with severe disease.
  • Your financial condition has been affected by a natural disaster.

In addition to these familiar circumstances, there may be other appropriate circumstances, too, which the ATO considers 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 accountant Perth 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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