Reminder: Increased ATO penalties

With the ATO shifting its focus on taxpayers with outstanding tax lodgments and debts, find out how to avoid being penalised at the increased penalty rates in 2023–24.

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, the 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 lodgements of returns and reports that include but are not limited to: 

• Activity statements 
• Income tax returns 
• Fringe Benefits Tax (FBT) returns 

• Pay As You Go (PAYG) withholding annual reports 
• Single touch payroll (STP) reports 
• Annual GST returns and information reports 
• Taxable payment annual reports (TPAR). 

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 unit) to $1,565 (5 penalty units), with one unit for every 28 days the lodgement 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 to take advantage of their lodgement amnesty that will run until 31 December 2023. 
Also announced in the 2023–24 Budget was the amnesty that applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022.
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 lodgement was due. Small businesses can avail the lodgement penalty amnesty and lodge eligible overdue forms before 31st  December 2023 and the ATO will automatically remit any associated failure-to-lodge penalties. 
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 lodgement due date so we can complete your lodgements on time. 
When payments are not made on time, the ATO can choose to add on General Interest Charges (GIC) to the owing amount(s). Each quarter the GIC rate is updated by the ATO. For July - September 2023, it is at 10.90% - the highest it has been in 10 years.

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(s), applying for remissions or if necessary, taking out a payment plan to pay off your tax debts. 

Remember - give us a call with any ATO queries and we can help.