Missed the 31 October tax return deadline? You are not alone, and the bill for being late is often smaller than people fear – as long as you deal with it before the ATO starts escalating.
This guide covers how the failure to lodge (FTL) penalty is worked out for 2025-26 returns and later, the new $364 penalty unit that applies from 1 July 2026, the general interest charge (GIC) on unpaid tax, and how to ask for a penalty to be remitted. Every figure was checked against the ATO failure to lodge penalty page and other ATO pages on 7 October 2026.
It is written for individuals, sole traders and small business owners who are behind on one or more returns. If your issue is mainly interest on an existing debt, read our guide to ATO interest on overdue tax as well.
Key takeaways
- The FTL penalty is 1 penalty unit for every 28 days (or part) a document is late, capped at 5 units for individuals and small entities.
- A penalty unit is $364 on or after 1 July 2026 ($330 from 7 November 2024 to 30 June 2026), so the individual cap is now $1,820.
- Medium entities pay 2 times and large entities 5 times the base penalty.
- The ATO generally does not apply an FTL penalty if the return results in a refund or nil amount.
- GIC on unpaid tax is 11.51% a year for October-December 2026, compounding daily, and is not deductible for amounts incurred from 1 July 2025.
- Lodge first, then ask for remission or a payment plan – lodging stops the 28-day clock.
Late lodgment penalty at a glance
| Item | Current rule |
|---|---|
| Penalty unit value | $364 on or after 1 July 2026; $330 from 7 Nov 2024 to 30 Jun 2026 |
| How the FTL penalty builds | 1 unit per 28 days (or part) late |
| Cap – individuals and small entities | 5 units ($1,820 at $364) |
| Medium entities | Base penalty x 2 |
| Large entities | Base penalty x 5 |
| Refund or nil result | Penalty generally not applied |
| GIC rate Oct-Dec 2026 | 11.51% a year (0.03153425% a day) |
| Default assessment penalty | 75% of the tax-related liability |
Source: ATO failure to lodge on time penalty, ATO penalty units, ATO GIC rates, ATO if you don’t lodge, checked 7 October 2026.
What is the failure to lodge penalty?
The FTL penalty is a fine for lodging a tax document after its due date. It is about lodging late, not paying late. You can owe nothing at all and still be charged it, although the ATO usually holds back when the return produces a refund or nil result.
It applies to more than income tax returns. The ATO lists activity statements, FBT returns, PAYG withholding reports, Single Touch Payroll reports and GST returns among the documents that can attract it.
How is the late lodgment penalty calculated?
The ATO looks at two things: the type and size of the entity when the document was due, and how long it has been since the due date. You are charged one penalty unit for every 28 days or part of 28 days, up to 5 units.
Because the 2025-26 individual due date of 31 October 2026 falls after 1 July 2026, the $364 unit applies. Here is how it builds for an individual or small business:
| Days late | Penalty units | Penalty at $364 |
|---|---|---|
| 1-28 | 1 | $364 |
| 29-56 | 2 | $728 |
| 57-84 | 3 | $1,092 |
| 85-112 | 4 | $1,456 |
| 113 or more | 5 (cap) | $1,820 |
For a medium entity the same table is doubled (up to $3,640) and for a large entity it is multiplied by five (up to $9,100). Significant global entities face a multiplier of 500.
Old figures you may still see
Many websites still quote $313 per unit and a $1,565 cap. That unit value only applied from 1 July 2023 to 6 November 2024. Check which period your due date falls in on the ATO penalty units page.
What other costs come with lodging late?
- General interest charge: if tax is unpaid after its due date, GIC accrues on a daily compounding basis. The rate is 11.51% a year for October to December 2026 and changes each quarter (see the ATO GIC page).
- No deduction for interest: GIC and shortfall interest charged from 1 July 2025 is no longer deductible, according to the ATO interest charged page.
- Default assessment: if the ATO cannot get a return from you, it can assess your income without your input. The ATO says this attracts a penalty of 75% of the tax-related liability.
- Audit and final notice: the ATO may audit to work out what you should have lodged, or issue a legal notice requiring lodgment by a set date. Ignoring that can lead to prosecution.
- Held refunds: in exceptional, high-risk cases the ATO may keep a refund until all returns are lodged.
If the ATO has already started looking at your affairs, our guide to what happens when the ATO reviews your return explains the process.
Who is most likely to be penalised?
The ATO decides case by case. Penalties are more likely where tax is owed, where returns have been missed for several years, or where reminder letters and texts have been ignored. Businesses with regular BAS, STP or PAYG obligations are also exposed because every late document is a separate penalty.
The ATO contacts people after the due date by SMS, online messages, letters or phone. Check that any contact is real before responding – you can confirm through your myGov account or by using the ATO contact details rather than numbers in a message.
How do I lodge overdue tax returns?
According to the ATO prior year return page, you have three options: myTax, a registered tax agent, or a paper return.
- myTax works for 2016 and later years, and some 2014 and 2015 returns if conditions are met.
- 2013 and earlier years need a tax agent or a paper return.
- No return needed? Lodge a non-lodgment advice. It can be done online for years back to 2000.
Lodge the oldest year you can first, but do not wait until every year is perfect. Each return lodged stops its own penalty clock.
Does using a tax agent extend my due date?
Most registered tax agents have a lodgment program that lets clients lodge after 31 October, but the ATO says you need to contact the agent before 31 October to be included.
There is a catch for people already behind. Under the 2025-26 agent lodgment program, taxpayers with one or more prior-year returns overdue at 30 June 2026 must lodge their 2026 return by 31 October 2026. If the overdue years are lodged by that date, the 2026 return reverts to the normal program date. See our tax due dates guide for the full calendar, or our guide to finding a registered tax agent.
Worked example: Priya lodges 112 days late
Priya lodges her own 2025-26 return, due 31 October 2026. She lodges it on 20 February 2027. From 31 October 2026 to 20 February 2027 is 112 days.
112 days is exactly 4 lots of 28 days, so the FTL penalty is 4 x $364 = $1,456. Had she lodged one day later (113 days), it would have been 5 units, or $1,820.
Her return shows $3,000 of tax owing. Say that amount stays unpaid for 90 days after its due date and the October-December 2026 GIC rate of 0.03153425% a day applied throughout. Compounding daily, GIC is about $3,000 x ((1.0003153425)90 – 1) = $86.35.
If her return had shown a refund instead, the ATO would generally not apply the FTL penalty at all.
Can the ATO waive a late lodgment penalty?
Yes. You can ask for the penalty to be remitted. Under the ATO remission guidance, it weighs your compliance history, whether you were willing but unable to comply because of circumstances outside your control or vulnerability, and whether other returns or debts are outstanding.
The ATO says requests are likely to be accepted for severe illness, natural disasters, missing third-party documents or domestic violence. They are likely to be declined for holidays, work commitments or minor illness.
- Individuals can request remission by phone or by mail.
- Businesses and sole traders can also use online services with the correct form.
- Include evidence such as medical certificates or professional letters. Using the wrong form can slow things down, per the ATO request page.
If interest is the bigger issue, our GIC remission guide walks through that request.
Rule of thumb: Lodge first, argue second. Every 28 days of delay can add $364, so get the return in, then ask for remission or set up a payment plan.
What if I cannot pay what I owe?
Lodge anyway. The FTL penalty is about the lodgment, and a debt can be managed separately. ATO payment plans can be set up online for debts of $200,000 or less, but GIC keeps accruing while you pay. Keeping your books up to date with help from our bookkeeping services makes it easier to stay current from here.
Common mistakes with overdue tax returns
- Waiting until you can pay: the penalty keeps building in 28-day blocks while you wait.
- Quoting old penalty figures: $313 and $1,565 are out of date for current due dates.
- Assuming an agent extension applies: you need to be on the agent’s list before 31 October, and overdue prior years change the rules.
- Ignoring ATO letters: it can lead to a default assessment with a 75% penalty, or a final notice.
- Not lodging a non-lodgment advice: if you did not need to lodge, tell the ATO so the year is not treated as overdue.
FAQ about overdue tax return penalties
What is the maximum failure to lodge penalty for an individual?
For an individual or small business the penalty is capped at 5 penalty units per document. A penalty unit is $364 on or after 1 July 2026, so the cap for a 2025-26 return due on 31 October 2026 is $1,820. Medium and large entities pay 2 or 5 times the base amount. Any general interest charge on unpaid tax is extra.
Will I be fined if I am owed a refund?
Generally no. The ATO says it usually does not apply a failure to lodge penalty when a return results in a refund or a nil amount, unless a penalty has already been applied or you are a large withholder. You still need to lodge, because any refund cannot be paid until the return is processed.
Can I go to jail for not lodging a tax return?
Not lodging is a criminal offence, and the ATO says a court can impose fines and imprisonment of up to 12 months. Prosecution normally follows ignored contact and a final notice requiring you to lodge by a set date, and the ATO tells you before it takes that step. For most people the realistic cost is penalties, interest and default assessments.
How many years back can I lodge an overdue return?
There is no cut-off for catching up. myTax can be used for returns from 2016 onwards, some 2014 and 2015 returns can be lodged online if conditions are met, and 2013 and earlier returns need a registered tax agent or a paper return. If you did not need to lodge for a year, a non-lodgment advice can be lodged online back to 2000.
Does a tax agent give me more time if I am already late?
A registered tax agent can only add you to their lodgment program if you contact them before 31 October. If you have prior-year returns overdue at 30 June 2026, the ATO expects your 2025-26 return by 31 October 2026, and the later program date applies only once the overdue years are lodged by that date.
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Behind on one or more returns? Nanak Accountants can lodge your overdue individual tax returns, work out what penalties and interest apply, and prepare a remission request where your circumstances support one. Call 1300 626 258 or visit Nanak Accountants to book.
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 penalty, penalty units, GIC, remission, prior year lodgment and agent lodgment program pages on 7 October 2026. Rates and thresholds change, so confirm the current position before acting.
