Behind on your tax returns or BAS? How to catch up and reduce penalties

Falling behind with your tax returns or BAS is more common than you think, and it can be fixed. The sooner you act, the more options you have.

How the failure to lodge penalty works

• The ATO can charge one penalty unit for every 28 days (or part of 28 days) a return or BAS is late, up to a maximum of 5 penalty units per document.
• The amount is higher for medium and large businesses.
• General interest charges can also apply to any unpaid tax.

If you have several years or quarters outstanding, these amounts add up quickly.

Step 1: lodge what's missing

Lodging your outstanding returns is the most important step, even if you can't pay straight away. Many people who are behind actually have refunds waiting for them.

Step 2: ask for the penalty to be remitted

You can ask the ATO to reduce or cancel a penalty. The ATO is more likely to agree if the delay was caused by circumstances such as serious illness, a natural disaster or missing information from a third party. Reasons like being busy with work or on holiday are usually not accepted. A good lodgement history also helps.

If you used a registered tax or BAS agent and gave them all your information on time, you may be protected under "safe harbour" rules.

Step 3: set up a payment plan

If you owe tax you can't pay in full, you can usually set up a payment plan with the ATO. Contact the ATO before a debt becomes overdue to show good faith.

How we help

We prepare overdue returns, lodge them together, and write the remission request for you (our fee for a late penalty waiver is $300 + GST). We can also respond to ATO letters and audits.

Send us a request with the years you need to catch up on, and we'll give you a clear plan and price.

This article is general information only and does not take your personal circumstances into account. It is not financial or tax advice. Tax rules change, so please contact us before acting on it. Information current as at the date above.