The Failure to Lodge penalty is one penalty unit for each 28 days a tax return is overdue, capped at five. At $330 a unit the maximum is $1,650. It can apply even when the ATO owes you money. What decides whether you pay it is your compliance history.
When is the return actually due?
31 October following the end of the financial year if you lodge it yourself, so a 2024-25 return is due by 31 October 2025. The financial year runs 1 July to 30 June, and the deadline does not move because you have left the country.
Lodging through a registered tax agent changes the date substantially. Agents work to a concessional lodgement programme running into the following May, provided you were on the agent's client list before the standard October deadline. Signing up with an agent in February does not retrospectively extend a deadline that passed in October.
How does the penalty build up?
In steps of 28 days, not daily, so two days late and twenty days late cost the same. Each completed period of 28 days adds another penalty unit until the cap of five, a little over four months.
- 1 to 28 days late: 1 unit, $330
- 29 to 56 days: 2 units, $660
- 57 to 84 days: 3 units, $990
- 85 to 112 days: 4 units, $1,320
- 113 days or more: 5 units, $1,650, the maximum
Does the penalty apply if you are owed a refund?
Legally yes, practically often not. The ATO's position is that the duty to lodge is separate from whether tax is payable, so a refund return lodged late is still a late return.
In practice the penalty is applied selectively, and the pattern decides it rather than the single year. A first late return from someone with no other history is treated very differently from a third consecutive year of nothing being lodged. Deliberate non lodgement, or several unlodged years discovered at once, is where refund returns get penalised in earnest.
When does interest get charged as well?
Only when the late return produces a debt. The General Interest Charge runs on unpaid tax from the original due date, compounds daily, and is set well above the cash rate, so a small debt left alone for a few years grows considerably.
A refund or nil outcome carries no interest, because there is nothing outstanding to charge it on. A late refund return is a much smaller problem than a late return with an ABN year behind it. Work out which of the two you have before deciding how urgent this is.
Can the penalty be cancelled?
It can be remitted, which means reduced or removed, and the ATO exercises that discretion reasonably often where there is a genuine reason. Illness or hospitalisation around the deadline, a bereavement, a natural disaster, or an ATO system failure that prevented lodgement are all recognised grounds.
Remission is not automatic and has to be asked for with something supporting it. A first offence against an otherwise clean record is the most commonly granted case, which is an argument for dealing with one late year now rather than letting three accumulate.
What happens if you have already left Australia?
The obligation follows you, and so does the debt. An unlodged return sits on the ATO record indefinitely, and the record has consequences that surface at inconvenient moments.
An outstanding ATO amount can be offset against a later refund, including in some circumstances against a DASP payment. An unresolved compliance position can cause Home Affairs to look more closely at a second or third year visa application. And a refund you never claimed is still sitting there unclaimed, which is the more common situation by a long way. Lodging late is usually better than not lodging, because the penalty is capped and the refund is not.
What if several years are unlodged?
Then the years interact, and not in your favour. The Failure to Lodge penalty is assessed per return rather than across the whole position, so three overdue years can each carry their own five units, and the pattern shifts the ATO from applying the penalty selectively to applying it as a matter of course.
The order you deal with them in matters too. Lodging the oldest first establishes a starting position for each later year, and a refund from one year can be offset against a debt from another, so the net outcome of several years lodged together is often very different from what any single year suggested. Refunds from earlier years are still payable, and unclaimed ones from a working holiday two or three years ago are recovered regularly.
What is the difference between lodging late and amending?
Two different processes with two different limits. Lodging late means the return was never filed, and there is no cut off date for filing it, which is why a 2022-23 return can still be lodged today.
Amending means a return was filed and something in it was wrong. For individuals the standard amendment window is two years from the date the notice of assessment was issued, after which the position is generally fixed. So a return lodged quickly but carelessly can end up worse than one lodged late but correctly: the late one can still be got right, and the wrong one eventually cannot.