Meeting your tax return lodgment obligations on time is essential. The Australian Taxation Office (ATO) imposes Failure to Lodge (FTL) penalties for overdue tax submissions. However, extenuating circumstances and the right assistance can sometimes mitigate these penalties. Discover how FTL penalties are calculated and what to do if you receive one.
Receiving an FTL Penalty
If you have an obligation to lodge documents such as tax returns, PAYG instalments, or GST reporting and fail to do so by the deadline, you may receive an FTL penalty. The ATO generally considers individual circumstances and may provide warnings before applying penalties.
How FTL Penalties are Calculated
The calculation of an FTL penalty depends on the size of the entity and the duration since the lodgment due date.
- For small entities, penalties are calculated at a rate of one penalty unit for each period of 28 days overdue, up to five penalty units.
- For medium entities, the penalty unit is doubled, while large entities have the unit multiplied by five.
- Significant global entities face even higher penalties.
Lodgments Subject to FTL Penalties
FTL penalties can be applied to various lodgments, including tax returns, activity statements, FBT returns, PAYG withholding annual reports, Single Touch Payroll reports, and more. Generally, a penalty is not applied to a late-lodged return if it results in a refund or a nil result, with certain exceptions.
Requesting Penalty Remission
If you receive an FTL penalty, you can request a remission if there are extenuating circumstances, such as natural disasters or serious illness. The ATO has the discretion to reduce the penalty based on individual circumstances. However, you can only request a remission once the overdue lodgments are submitted.
Safe Harbour Provisions
Engaging a registered tax agent can offer some protection against FTL penalties. If you can prove that you provided all relevant information to the agent and that their failure to lodge was not due to recklessness or intentional disregard of the law, you might be exempt from the FTL penalty.
Avoiding FTL Penalties with Expert Assistance
Personalised expert assistance is invaluable in navigating tax return lodgment and avoiding tax penalties. An experienced tax consultant can guide you through the intricacies of ATO rules and help you stay compliant.
Don’t face tax penalties alone. Engage with Accountants Direct’s expert tax consultants, who can assist you in timely tax return lodgment and guide you through the process if you are facing FTL penalties. Safeguard your interests and stay informed. Contact us today!
Timely tax return lodgment is crucial. If you are facing Failure to Lodge penalties, understand that extenuating circumstances and expert assistance can sometimes mitigate these penalties. Engage with a knowledgeable tax consultant to navigate Australian Taxation Offices’ rules effectively. #TaxReturnLodgment #ATOPenalties
Stephen is the CEO of Accountants Direct and is a Professional Director, ASIC Agent, Startup Advisor & Investor & Capital Raising Specialist.
Contact Stephen or his team if you have any questions about this post or any business matter in general.
