There are now greater penalties in place for breaches of most Australian tax laws. The ATO has increased the value of a penalty unit from $110 to $170, the first such increase since 1997.

A maximum of 5 penalty units for a very late tax return increases $300 to $850 ($170 x 5) from the previous $550 ($110 x 5).The new rate applies to offences that occurred after 28 December 2012, with breaches occurring before this date incurring the previous penalty rate of $110.  Furthermore, under the new legislation, the penalty unit will be up for review every three years.

Individuals and businesses who fail to lodge returns on time will have to pay $170 for each 28 days that the return is overdue, up to a maximum of 5 penalty units.

For businesses, penalties can apply for each late tax return including PAYG withholding annual reports, FBT returns and activity statements such as BAS, IAS and GST.

Medium sized businesses with a turnover of between $1 million and $20 million face a penalty of 2 times, so that a 5 penalty unit for an individual or small business, becomes a 10 penalty unit with a fine of $1,700. Businesses should remember that the Failure to Lodge (FTL) penalty cannot be claimed as a tax deduction. This can result in significant financial consequences for multiple breaches. 

Useful check for claiming your entitled deductions

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At the end of the financial year it can be a daunting tasks preparing your Individual Tax Return for lodgement. Use this calculator to assist with collecting all the information you'll need.

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