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Failure to lodge on time penalty increased

Jan 11, 2013

A Failure to Lodge on Time (FTL) penalty is an administrative penalty that may be applied if taxpayers are required to lodge a return, notice, statement or other approved form with the Australian Taxation Office (ATO) by a particular day, and does not do so.  Approved forms include activity statements, income tax returns, fringe benefits tax (FBT) returns, pay as you go (PAYG) withholding annual reports, annual goods and services tax (GST) returns and annual GST information reports.

The application of FTL penalty is not dependent on the ATO receiving the document - the penalty applies whether or not the document is ultimately lodged.

FTL penalty is calculated at the rate of one penalty unit for each period of 28 days or part thereof that the document is overdue, up to a maximum of five penalty units. Size tests also apply, so that the penalty for larger entities is multiplied by either two or five.

Under most Commonwealth laws, financial penalties are expressed in terms of 'penalty units' instead of dollar figures. The value of 1 penalty unit has been $110 since 1997, and increased to $170 on 28 December 2012. For failing to lodge on time penalty, the increased rate will only apply where the first day of the relevant 28-day period or part thereof occurs on or after 28 December 2012.

The size of an entity is related to its assessable income, withholder status, or its current GST turnover. 

The ATO will calculate the period of time the document is overdue from the day the document is due to be lodged to the day before the document is received. 

If the document is not received (that is, not lodged), the ATO will calculate the penalty from the lodgment due date to the day before the day penalty is applied. If the ATO has not applied the maximum penalty allowed by law to a document that is not lodged, they may increase the penalty amount at a later date.

If you anticipate difficulty in lodging a document (such as an activity statement or income tax return) on time, it is extremely important to contact the ATO before the document is due to discuss possible alternative arrangements. 

If a penalty is applied, you can ask for it to be reduced in part or in full. The grounds for the remission of FTL penalty are contained in PS LA 2011/19.  

The ATO will probably grant remission of FTL penalty where it is fair and reasonable to do so - for example, in the event of natural disasters, or the serious illness of yourself or your tax agent.

FTL penalty remission requests of up to $10,000 can now be granted over the phone - requests for remissions are considered on a case-by-case basis by the Tax Office.

 

Tags: Company taxFBTGSTPersonal taxSmall Business

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