Announced as part of the 2023–24 Federal budget, increased funding has been provided to the ATO to scrutinise taxpayers who have high-value outstanding debts of over $100,000 and aged debts older than two years where those taxpayers are:

• public and multinational groups with an aggregate turnover of over $10 million, or
• privately owned groups or individuals controlling net wealth of over $5 million.

Increased penalty rates

After a recent increase 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 lodgements 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 us all necessary information well before the lodgment due date so we can complete your lodgments on time.

If you anticipate delays, 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.

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.