If you are working out what a late tax return will cost you, the arithmetic is short. The ATO counts how many 28-day periods the return is late, multiplies by the value of a penalty unit, and caps the result. The size of your business then scales the figure.
This is a quick calculator-style guide to the failure to lodge (FTL) penalty for 2025-26 returns due now and 2026-27 lodgments, using the $364 penalty unit that applies from 1 July 2026. Figures were checked against the ATO’s failure to lodge on time penalty and penalty units pages on 9 October 2026.
It suits individuals, sole traders and business owners who want a number fast. For the full picture on overdue returns, including default assessments, prosecution and catching up several years, read our main guide to the overdue tax return penalty in Australia.
Key takeaways
- FTL penalty = 1 penalty unit per 28 days (or part) late, up to 5 units.
- A penalty unit is $364 for infringements on or after 1 July 2026 ($330 from 7 November 2024 to 30 June 2026).
- Individuals and small withholders: $364 to $1,820. Medium withholders x2: up to $3,640. Large withholders x5: up to $9,100.
- The ATO generally does not issue an FTL notice where a late return results in a refund or nil (except large withholders).
- GIC is separate and runs on unpaid tax: 11.51% a year for October to December 2026.
Late tax return penalty at a glance
| Days late | Units | Individual / small | Medium (x2) | Large (x5) |
|---|---|---|---|---|
| 1 to 28 | 1 | $364 | $728 | $1,820 |
| 29 to 56 | 2 | $728 | $1,456 | $3,640 |
| 57 to 84 | 3 | $1,092 | $2,184 | $5,460 |
| 85 to 112 | 4 | $1,456 | $2,912 | $7,280 |
| 113 or more | 5 (cap) | $1,820 | $3,640 | $9,100 |
Source: ATO failure to lodge on time penalty, ATO penalty units ($364 for infringements on or after 1 July 2026), checked 9 October 2026. Significant global entities pay 500 times the base penalty.
How do I calculate my late lodgment penalty?
- Count the days late from the due date to the day you lodge. Our guide to tax due dates lists the common deadlines; self-lodgers have until 31 October 2026 for 2025-26 returns.
- Divide by 28 and round up. Any part of a 28-day period counts as a full period.
- Cap at 5 units.
- Multiply by the penalty unit that applied when the infringement occurred: $364 on or after 1 July 2026, $330 from 7 November 2024 to 30 June 2026.
- Apply the size multiplier: x1, x2 or x5.
Formula: minimum of (days late / 28, rounded up) and 5, x penalty unit, x multiplier.
Am I a small, medium or large entity for the penalty?
The ATO uses withholding and income tests, not just turnover. Older articles, including earlier versions of this page, used the wrong bands. According to the ATO:
| Category | ATO test | Multiplier |
|---|---|---|
| Individual or small withholder | Individuals, and withholders of $25,000 or less a year | x1 |
| Medium withholder | Withholds more than $25,000 but less than $1 million a year, and assessable income or GST turnover of $1 million to $20 million | x2 |
| Large withholder | Withholds (or its wholly-owned group withholds) more than $1 million in the previous year, and assessable income or GST turnover of $20 million or more | x5 |
When does the ATO actually apply the penalty?
Not automatically. The ATO says it generally does not penalise isolated late lodgments. It warns you by phone or in writing and issues a notice to lodge first. Penalties are more likely where late lodgment is repeated or you ignore a request to lodge, so read our guide on what happens if you ignore ATO letters.
It also generally will not issue an FTL notice for a late tax return, FBT return, annual GST return or activity statement that results in a refund or nil result. Exceptions: the penalty was applied before you lodged, the document is a third-party report such as a taxable payments annual report, or you are a large withholder.
If you never lodge, the stakes rise. The ATO can issue a default assessment with a 75% administrative penalty, and failing to lodge is a criminal offence that can lead to prosecution (ATO if you don’t lodge).
Does interest apply on top?
Yes, if you owe tax. The FTL penalty is for lodging late. The general interest charge is for paying late, and it compounds daily on unpaid tax from the due date. The GIC rate for October to December 2026 is 11.51% a year. A payment plan does not stop GIC; it keeps accruing on the plan. Our guide to ATO interest on overdue tax explains remission, and the ATO’s interest and penalties section covers both charges. For one public example of tax debt escalating, see our explainer on the Sam Wood ATO tax debt.
Worked example: three businesses, three penalties
Small: an individual. Raj’s 2025-26 return was due 31 October 2026. He lodges on 15 January 2027 with tax to pay. Days late: 30 (November) + 31 (December) + 15 (January) = 76. 76 / 28 = 2.7, rounded up to 3 units. 3 x $364 = $1,092.
Medium: a wholesaler. A medium withholder lodges an activity statement 40 days late with GST payable. 40 / 28 = 1.4, rounded up to 2 units. 2 x $364 x 2 = $1,456.
Large: a construction group. A large withholder lodges a return 200 days late. 200 / 28 = 7.1, rounded up to 8, capped at 5 units. 5 x $364 x 5 = $9,100.
In each case GIC on any unpaid tax is extra, and if Raj’s return had produced a refund, the ATO would generally not have issued a penalty notice.
Can the penalty be reduced or cancelled?
- Remission. Ask the ATO to remit all or part of the penalty. Likely accepted: severe illness, disasters, missing third-party information after a genuine attempt, financial abuse or family violence. Likely declined: holidays, work commitments, short-term illness, not receiving reminders. See how to request a remission; requests over $2,500 by phone go to a dedicated team.
- Safe harbour. If you gave your registered tax or BAS agent everything in time and their failure was not reckless or intentional, you may not be liable.
- Lodge first. The ATO expects outstanding documents to be lodged before it considers remission.
The ATO’s penalties section has the full rules. Before you lodge, run through our tax return checklist, and check our older guide to tax return due dates if you are catching up earlier years.
Rule of thumb: If you cannot lodge on time, lodge late but lodge soon. Every extra 28 days adds a penalty unit until the 5-unit cap, and a refund or nil return generally avoids the penalty altogether.
Common mistakes when working out a late lodgment penalty
- Using the old unit value. Infringements on or after 1 July 2026 use $364, not $330 or $313.
- Rounding down. 29 days late is 2 periods, not 1.
- Using turnover bands that do not exist. The x2 and x5 multipliers depend on withholding and income tests.
- Assuming a payment plan stops interest. GIC keeps accruing on plans.
- Waiting for a perfect return. Lodging promptly stops new 28-day periods building up.
FAQ about the late tax return penalty
How much is the late tax return penalty in 2026?
For an individual or small entity, the failure to lodge penalty is 1 penalty unit for each 28 days or part of 28 days late, up to 5 units. A penalty unit is $364 for infringements on or after 1 July 2026, so the range is $364 to $1,820. Medium withholders pay double and large withholders five times those amounts.
Will I be fined if my late return gives me a refund?
Generally no. The ATO says it generally will not issue a failure to lodge penalty notice for a late tax return or activity statement that results in a refund or nil result. The exceptions are where the penalty was applied before you lodged, third-party reports such as a taxable payments annual report, and large withholders.
Does the ATO fine every late lodgment?
No. The ATO says it generally does not penalise isolated late lodgments. Before applying a penalty it warns you by phone or in writing and issues a notice to lodge. Penalties are more likely where lateness is repeated or you ignore a request to lodge, which is why responding to ATO letters matters.
Can I get a late lodgment penalty cancelled?
You can ask the ATO to remit all or part of it. Requests involving severe illness, a disaster, missing third-party information after a genuine attempt to get it, or family violence are likely to be accepted. Holidays, work commitments, short-term illness and not receiving reminders are likely to be declined. Lodge the outstanding return first.
What if my tax agent lodged late?
Safe harbour may apply. You may not be liable if you gave your registered tax or BAS agent all relevant information in time and the agent’s failure was not reckless or intentional. Businesses can request cancellation through online services secure mail, and requests of $10,000 or more must be made in writing.
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This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO failure to lodge on time penalty, penalty units, remission, if you don’t lodge, payment plan and GIC pages on 9 October 2026. Rates and thresholds change, so confirm the current position before acting.
