Key facts
- Penalty unit value
- $364 from 1 July 2026 ($330 before that)
- Failure to lodge penalty
- 1 penalty unit per 28 days or part, up to 5 units
- Maximum for an individual
- $1,820 (5 penalty units of $364)
- Refund or nil return
- Penalty notice generally not issued
- Interest (GIC), October to December 2026
- 11.51% a year on tax paid late
- Deducting ATO interest
- Not deductible if charged on or after 1 July 2025
How the failure to lodge penalty is calculated
The failure to lodge (FTL) penalty is one penalty unit for every 28 days, or part of 28 days, that your return is overdue, up to 5 penalty units. For individuals the base amount applies. A penalty unit is $364 for infringements on or after 1 July 2026, up from $330.
Worked example: your 2025-26 return is lodged 74 days after its due date. 74 days is two full 28-day periods plus part of a third, so it counts as 3 periods. The penalty is 3 x $364 = $1,092. After 113 days or more, the penalty reaches the cap of 5 x $364 = $1,820.
The ATO generally warns you by phone or in writing, and issues a notice to lodge, before it applies a penalty. Lodging as soon as you get that warning stops the penalty growing.
What if you are owed a refund?
Generally, the ATO won't issue an FTL penalty notice for a late tax return that results in a refund or a nil result. That is why many people who are owed money are not penalised when they lodge late.
There are exceptions. A penalty can still apply if one was applied before you lodged, and the general rule does not cover third-party reports or large withholders. The ATO can also hold a refund until you lodge, although it says it keeps this for exceptional, high-risk cases.
Interest if you owe tax
If your return shows tax to pay and you pay late, the general interest charge (GIC) applies to the unpaid amount. For October to December 2026, the GIC rate is 11.51% a year, or 0.03153425% a day. The rate changes every quarter.
GIC charged on or after 1 July 2025 is no longer tax deductible, so it is a real cost. If you can't pay in full, contact the ATO early rather than waiting.
What happens if you keep not lodging?
Not lodging at all leads to firmer action over time. The ATO can issue a default assessment based on its own estimate of your income, and the ATO says this attracts a 75% penalty on the tax-related liability. It gives you details and time to lodge before doing this.
Failing to lodge is a criminal offence. The ATO can issue a final notice requiring you to lodge by a set date, and ignoring it can lead to prosecution, with fines or imprisonment of up to 12 months. The ATO says it will tell you before it starts that action.
How to fix a late tax return
Lodge as soon as you can, including any earlier years that are outstanding. If you can't lodge by the due date, the ATO asks you to contact it as soon as possible, and support is available if you are going through personal difficulties.
Once everything is lodged, you can ask the ATO to remit all or part of a penalty. Each request is judged on its merits, and you need to explain what happened, how it caused the delay and why you couldn't ask for more time. If you use a registered tax agent, safe harbour can protect you where you gave the agent everything in time and the agent's failure was not reckless or intentional.
- Likely accepted: severe illness affecting you, your agent or someone you care for
- Likely accepted: a disaster, or not getting information you needed from others
- Likely accepted: family violence or financial abuse
- Likely declined: holidays, work commitments, a short minor illness or not getting reminders
When to get help
If you have one late return and expect a refund, lodging it is usually the whole fix. If you have several years outstanding, tax to pay or an ATO letter, it helps to have an agent lodge the backlog in the right order and deal with the ATO for you.
Acquire Strategic Accounting is a registered tax agent in Brisbane. We help people catch up on overdue returns.
Related questions
Is there a penalty for lodging late if I get a refund?
Generally no. The ATO says it generally won't issue a failure to lodge penalty notice for a late return that results in a refund or nil. A penalty can still apply if one was applied before you lodged.
Can the ATO cancel a late lodgment penalty?
Yes, you can ask the ATO to remit all or part of it after you have lodged everything outstanding. It is more likely to agree where something like a severe illness or disaster caused the delay, and less likely for holidays or work commitments.
What if my tax agent lodged late?
Safe harbour can protect you from the penalty if you gave your agent all the relevant information in time and the agent's failure was not reckless or intentional. Keep evidence of what you sent and when.
Is it a crime not to lodge a tax return?
Yes, failing to lodge is a criminal offence, and the penalties can include fines or up to 12 months' imprisonment. The ATO normally sends warnings and a final notice first, and says it will tell you before it starts prosecution.
What if I haven't lodged for several years?
Lodge all the outstanding returns and contact the ATO or a registered tax agent early. Lodging several years at once can take longer to process, so allow extra time for any refunds.
Sources
General information only, current at 31 October 2026. It does not take your circumstances into account. Rates and thresholds change, so check with us or the ATO before you act.
