How much penalty for late tax return?

Quick Answer

Yes, the ATO charges a Failure to Lodge (FTL) penalty if you lodge your tax return late. The penalty is calculated at a rate of $312 for every 28 days (or part thereof) that your return is overdue, up to a maximum of five penalties ($1,560). However, the ATO may remit the penalty if you have a reasonable excuse, such as a natural disaster, serious illness, or being interstate or overseas at the time.

How the Late Tax Return Penalty Works in Australia

When you fail to lodge your tax return by the due date, the Australian Taxation Office (ATO) applies an automatic penalty known as the Failure to Lodge (FTL) on time penalty. This penalty is not discretionary in the sense that the system applies it automatically once the return is overdue — but taxpayers can lodge a request to have it remitted if they have a valid reason.

How Much Is the FTL Penalty?

The ATO calculates the FTL penalty using an administrative penalty system. The base penalty unit for a late tax return is:

• $312 per 28-day period (or part of a 28-day period) that the return remains outstanding
• Maximum of 5 penalty periods, capping the total at $1,560

For example, if you lodge your tax return 3 months late, you could face up to $936 in FTL penalties alone. If you lodge more than 140 days overdue, you hit the maximum $1,560 penalty. It’s worth noting that this penalty applies on top of any tax you owe — it’s a purely administrative charge for lateness.

When the ATO May Remit the Penalty

The ATO has the power to remit (waive) the FTL penalty if you can demonstrate a reasonable excuse. The ATO defines a reasonable excuse as circumstances where you:

• Took reasonable care in arranging your-affairs but were unable to lodge due to circumstances beyond your control
• Were unable to lodge because of a natural disaster, serious illness, or serious accident
• Were interstate or overseas and unable to access your records
• Relied on a registered tax agent who failed to lodge on your behalf (though this has limitations)

The key is that you must be able to demonstrate that the situation was genuinely beyond your control. Simply forgetting or being busy is generally not considered a reasonable excuse.

Interest on Outstanding Tax (GIC)

In addition to the FTL penalty, if you owe tax and pay late, the ATO also charges the General Interest Charge (GIC). As of 2024-25, the GIC rate is set at approximately 11.38% per annum (compounded daily). This is applied to any tax outstanding after the due date, on top of the FTL penalty.

What If You Cannot Pay on Time?

If you know you cannot lodge or pay by the due date, it’s critical to contact the ATO before the deadline. You may be able to:

• Apply for a payment extension
• Set up a payment plan for any tax owed
• Negotiate a compromise in special circumstances

Contacting the ATO proactively often results in the FTL penalty being reduced or remitted entirely, especially for first-time late lodgers with a genuine reason.

Summary

The bottom line: lodge on time wherever possible. The FTL penalty starts accruing at $312 per 28 days and caps at $1,560. If you’re going to be late, contact the ATO before the due date — it can save you hundreds or even thousands of dollars in penalties and interest.