Avoid ATO's Increased Tax Penalties

Posted 24 Aug '23

Avoid ATO's Increased Tax Penalties

After a recent increase in ATO penalty rates in January 2023 from $222 to $275, Commonwealth penalty unit rate has witnessed yet another hike from 1 July 2023 and currently sits at $313 per unit. This means that if you fall behind on your tax lodgments you can expect the financial penalties to increase substantially.

Penalties may be levied on late lodgments of returns and reports that include but are not limited to:

• Activity statements

• Income tax returns

• FBT returns

• PAYG withholding annual reports

• Single touch payroll reports

• Annual GST returns and information reports

• Taxable payment annual reports.

With the increased rates now in effect, a small business can expect to pay base penalties for failure-to-lodge returns ranging anywhere between $313 (1 penalty units) to $1,565 (5 penalty units), one unit for every 28 days the lodgment is overdue.

Small business lodgment penalty amnesty

The ATO is encouraging small businesses that have overdue income tax returns, fringe benefits tax returns or business activity statements etc. to take advantage of a lodgment amnesty that will run until 31 December 2023.

Announced in the 2023–24 Budget, the amnesty applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022 and has been available since 1 June 2023.

To be eligible for the amnesty, the small business must be an entity with an aggregated turnover of less than $10 million at the time the original lodgment was due.

Next steps

To avoid being penalised at the revised higher rates for failing to lodge returns and reports, ensure you collate and send all your necessary information well before the lodgment due date so your lodgment can be completed on time.

Small businesses can avail the lodgment penalty amnesty and lodge eligible overdue forms before 31 December 2023 and the ATO will automatically remit any associated failure-to-lodge penalties.

If you anticipate delays, the best practice is to engage with the ATO and tell them your situation. We can assist you with requesting an extension in lodgment due date, applying for remissions or if necessary, taking out a payment plan to pay off your tax debts.

Please feel free to get in touch with your WDF contact or phone 02 6921 5444 to talk with us about how we can further help you avoid ATO penalties.

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