ATO late lodgement and failure to lodge penalties

The ATO late lodgement penalty, formally the failure to lodge on time (FTL) penalty, is 1 penalty unit for every 28 days or part of 28 days that a return or statement is late, up to 5 penalty units. It is doubled for medium entities and multiplied by 5 for large ones (Taxation Administration Act 1953 (TAA), Sch 1 ss 286-75 and 286-80). It applies whether or not any tax is owed, and the ATO can remit it.

We prepare FTL remission requests and objections, usually alongside your accountant, as part of our work on ATO penalties and penalty remission. Section references below are to Schedule 1 of the TAA unless we say otherwise.

What is a failure to lodge penalty?

You are liable to the penalty if a taxation law requires you to give the ATO a return, notice, statement or other document in the approved form by a particular day, and you don't (s 286-75(1)). The ATO's practice statement on this penalty, PS LA 2011/19, lists the most common documents (para 5), including:

• activity statements
• income tax returns
• fringe benefits tax returns
• PAYG withholding annual reports
• taxable payments annual reports.

Three points catch people out:

• It isn't linked to tax owed. A nil activity statement or a return showing a refund can still attract it. The ATO says it generally won't issue a penalty notice for a late tax return, FBT return, annual GST return or activity statement with a nil or refund result, unless it applied the penalty before the document was lodged, the document is a third-party report such as a taxable payments annual report, or you are a large withholder (ATO, "Failure to lodge on time penalty", last updated 22 June 2026). So lodge before the ATO applies a penalty, or you may lose that concession.
• One penalty per activity statement. At law each obligation reported on an activity statement can attract a penalty, but the ATO generally applies only one per statement (PS LA 2011/19 para 11).
• Super guarantee is separate. Documents under the Superannuation Guarantee (Administration) Act 1992 and two other superannuation Acts are outside this penalty (s 286-75(2)).

How much is the ATO late lodgement penalty?

The base penalty is 1 penalty unit for each period of 28 days, or part of a period, from the due date until you lodge, up to a maximum of 5 penalty units (s 286-80(2)). It is then multiplied if the entity was a medium or large entity when the document was due (s 286-80(3)–(4C)).

Entity	Any one of these tests	Multiplier	Maximum
Medium	Medium withholder (more than $25,000 of PAYG withholding in an earlier financial year), or assessable income or current GST turnover over $1 million but under $20 million	× 2	10 penalty units
Large	Large withholder (more than $1 million of PAYG withholding in a financial year ending at least 2 months earlier), or assessable income or current GST turnover of $20 million or more	× 5	25 penalty units
Significant global entity, or a global or domestic minimum tax lodgement	s 286-80(4A) and (4C)	× 500	2,500 penalty units
Everyone else	None of the above	× 1	5 penalty units

The withholder tests are in ss 16-95 and 16-100. A business with only a few employees can withhold more than $25,000 a year from wages, which generally doubles any FTL penalty it receives.

What is a penalty unit worth?

The value of a penalty unit is set by s 4AA of the Crimes Act 1914 and indexed every three years, most recently on 1 July 2026 (Crimes (Amount of a Penalty Unit) Instrument 2026). The ATO's Penalty units page (last updated 26 June 2026) lists it as $330 from 7 November 2024 to 30 June 2026 and $364 from 1 July 2026. The value that counts is the one in force at the start of each 28-day period (s 286-80(5)), so a document that was already late before 1 July 2026 can have periods at both rates. At $364 a unit, the maximum FTL penalty for one document is $1,820 for most smaller businesses and individuals, $3,640 for a medium entity and $9,100 for a large one.

For example, suppose a company that withheld $40,000 from wages last financial year lodges a BAS, due after 1 July 2026, 60 days late. That is three 28-day periods (the last one part only), so the base penalty is 3 penalty units, doubled to 6 because the company is a medium withholder. At $364 a unit, that is $2,184.

The penalty can arrive before you lodge

The ATO can notify you of the penalty while the document is still outstanding and increase it later, up to the maximum (s 286-80(6)). The notice must be in writing and give reasons (s 298-10). The penalty is due on the date in the notice, at least 14 days after it is given (s 298-15), and general interest charge runs on any of it left unpaid after that (s 298-25).

When does the ATO apply a late lodgement penalty?

Not every late document is penalised. The ATO applies the penalty either automatically, using filters that exclude low-risk documents and entities, or manually, for example where documents remain overdue or non-compliance is escalating (PS LA 2011/19 para 7). The practice statement was last updated on 28 May 2026 and is flagged by the ATO as under review.

In deciding whether to apply it, the ATO considers factors including your compliance history, the effort it took to get the document lodged, whether you knew about the obligation, how long the document was overdue, and any contact you or your agent had with the ATO before the due date (para 10).

There is no rule that a first late lodgement is penalty-free. The ATO says it generally doesn't apply the penalty in isolated cases of late lodgement (ATO, "Failure to lodge on time penalty"), and a good record and early contact both count. The ATO's once-in-3-years penalty relief for individuals and smaller entities covers inadvertent errors in returns and activity statements, not late lodgement (ATO, Penalty relief page, last updated 22 June 2026).

Asking for more time before the due date

The ATO can defer the time for lodging a document (s 388-55(1)). If it does, the penalty runs from the deferred due date (PS LA 2011/19 para 29), although the time for paying isn't deferred (s 388-55(2)). If the ATO only agrees to hold off enforcement action, the penalty still runs from the original due date (para 30).

If you use a tax agent

Registered tax agents and BAS agents have a lodgment program with the ATO that generally gives their clients later due dates than the standard ones, provided the client is on the agent's list in time. Under the 2026–27 program, a client's 2026 income tax return was covered only if the agent added the client to its list by 31 October 2026 and any overdue earlier returns were lodged by then, and returns must be lodged electronically. The ATO says a new client added after 31 October 2026 who previously lodged their own returns isn't covered and may have an earlier due date, so check the due date with your agent straight away (ATO, "Ensure clients are covered by your lodgment program", last updated 1 July 2026).

The law also gives you a safe harbour. You are not liable to the penalty if you engaged a registered tax or BAS agent, gave them all the relevant information in time for them to lodge, and the late lodgement didn't result from the agent's intentional disregard of a taxation law or recklessness (s 286-75(1A)). You carry the evidential burden of showing you gave the agent the information (s 286-75(1B)). If you raise it, the ATO generally gives the agent an opportunity to comment (PS LA 2011/19 para 45), so we deal with it together with your accountant. If the ATO decides the safe harbour doesn't apply, it can still consider remission (para 45).

Is there an ATO lodgement penalty amnesty?

We are not aware of one as at November 2026. The ATO's small business lodgment penalty amnesty ran from 1 June to 31 December 2023, for income tax returns, FBT returns and BAS originally due between 1 December 2019 and 28 February 2022 (ATO media release, 6 December 2023). Overdue documents lodged now fall under the normal rules, including remission.

Can the ATO waive or remit an FTL penalty?

Yes. The Commissioner may remit all or part of the penalty (s 298-20(1)). PS LA 2011/19 describes three situations where remission should be considered:

1. Circumstances beyond your control. The late lodgement was caused by circumstances beyond your control that couldn't be predicted, and you or your agent weren't in a position to ask for more time (para 36).
2. Fair and reasonable. Even if the circumstances were within your control, remission may be fair and reasonable given the specific event that prevented lodgement. The onus is on you to show this (paras 37–38).
3. Unjust result. For example, multiple FTL penalties arising from one administrative oversight may be unjust (para 40).

The ATO gives examples of each (paras 42–43):

Remission would ordinarily be appropriate	Remission ordinarily wouldn't be appropriate
A severe, life-threatening illness of you or your agent	Being on holiday or very busy
Caring for someone with such an illness	A short-lived illness
Being unable to get information from others (such as an income statement) despite persistent attempts	Not receiving ATO reminders
A fire, flood or other disaster	Not having lodged yet
Vulnerability, such as family violence or serious mental health challenges

How to ask the ATO to remit a late lodgement penalty

1. Lodge the overdue document first. The ATO generally remits only after the document is lodged and the penalty has been applied to your account (para 34).
2. Put it in writing. A request can be made by phone, but the ATO asks for it in writing where the penalty was applied manually, the document is still overdue or a phone request doesn't clearly make the case (paras 32–33). Writing also gives you a record if you later object.
3. Explain the delay and what you did. Set out the reasons for the late lodgement and the steps taken to lodge (para 32), tied to one of the three situations above.
4. Attach evidence. Medical letters, emails chasing information and a timeline of due and lodgement dates.
5. Deal with the interest at the same time. GIC on an unpaid penalty is remitted under a different power (TAA s 8AAG). See how to ask the ATO to remit interest.

If the ATO refuses or remits only part of the penalty, it must give you written notice of the decision and its reasons (s 298-20(2)).

Can you object if remission is refused?

Your review rights depend on how much penalty is left after the decision.

After the ATO's decision	What you can do
More than 2 penalty units remain	Object under Part IVC of the TAA (s 298-20(3))
2 penalty units or less remain	No objection right; judicial review under the Administrative Decisions (Judicial Review) Act 1977 may be available (PS LA 2011/19 para 47)
ATO decides the tax agent safe harbour doesn't apply	No objection right against that decision; judicial review may be available (para 48), and you can still ask for remission

An objection must generally be lodged within 60 days after notice of the remission decision is served on you (TAA s 14ZW(1)(c)). If that time has passed, you can lodge the objection with a written request for the ATO to treat it as lodged in time, setting out fully and in detail why it is late (TAA s 14ZW(2)–(3)). The ATO decides whether to agree, and a refusal can be reviewed by the Administrative Review Tribunal (TAA s 14ZX).

If the objection is disallowed, you can apply to the Tribunal or appeal to the Federal Court (TAA s 14ZZ), generally within 60 days after notice of the objection decision is served (TAA ss 14ZZC and 14ZZN). See our pages on ATO objections and objection time limits and late objections.

What happens if you don't lodge at all?

The FTL penalty is often the smallest consequence.

• A 75% penalty on a default assessment. If you don't lodge and the ATO works out your liability without the document, for example by a default assessment (Income Tax Assessment Act 1936, s 167), you can be liable to a penalty of 75% of that liability (s 284-75(3) and s 284-90(1) item 7). The base penalty is increased by 20%, to 90% of the liability, if you have been liable to this penalty before (s 284-220(1)(e)). Unlike the FTL penalty, it is assessed, and you can object to the assessment (s 298-30).
• Director penalty lockdown. If a company doesn't report its PAYG withholding or GST within 3 months after the due date, a director penalty for the unreported amount generally can no longer be remitted by appointing an administrator or small business restructuring practitioner or winding the company up (s 269-30(2)). See lockdown director penalty notices.
• Prosecution. Failing to lodge when required is an offence (TAA s 8C), punishable by fines set in penalty units. An individual previously convicted of two or more relevant offences can face up to 12 months' imprisonment (TAA ss 8E(3) and 8F). A court that convicts you can also order you to lodge (TAA s 8G).

If the documents you are about to lodge also correct earlier mistakes, read our guide to making a voluntary disclosure to the ATO first.

Next step

Send us the FTL penalty notice, a list of the documents that were late with their due dates and lodgement dates, and a short note on why they were late, with any evidence such as medical letters or emails. If a tax or BAS agent was meant to lodge, tell us when you gave them your records. If the ATO has already refused remission, include its letter so we can check whether the 60-day objection period is running and which review right applies.