A Failure to Lodge (FTL) penalty is an administrative penalty which the Tax Office can impose on a taxpayer for failure to lodge a return, statement, notice or other document on time.
The base penalty is $110 (1 penalty unit) for each 28 day period or part thereof. This is multiplied by a factor of two for medium taxpayers and a factor of five for large taxpayers.
Generally, the ATO won’t usually apply a FTL penalty to the late lodgment of income tax returns, activity statements, etc. if they result in a refund or nil result. However, the penalty can still apply (it’s really at the ATO’s discretion).
I have only seen one case of a taxpayer receiving a FTL despite their tax return ultimately being lodged and resulting in a refund. In this case, there was a history of late lodging, multiple years were outstanding and several demands for lodgment had gone ignored before the taxpayer took action. Needless to say, it does not help to compound the problem!
The FTL penalty rates for small taxpayers are:
0 – 28 days overdue = $110
29 – 56 days overdue = $220
57 – 84 days overdue = $330
85 – 112 days overdue = $440
113+ days overdue = $550
(a small taxpayer generally has a turnover under $1m).
A full table of these rates, including the penalties applicable for medium and large taxpayers, is available on our main website here.
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Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
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