The window to lodge your tax return yourself is closing in just a few weeks. (Source: Getty/Supplied)
Every year, millions of Australians are required to lodge a tax return. For most, it’s a routine part of the financial calendar – you gather your income details, claim your deductions, and file your return before the October 31 deadline (or later if you’re with a registered tax agent). However, for those who neglect or avoid lodging, the Australian Taxation Office (ATO) takes the matter seriously.
Failing to lodge on time – or at all – can lead to escalating penalties, unnecessary stress, and in some cases, legal consequences.
Taxpayers who use a tax agent, like those at Tax Return & Tax Accountants in Australia | H&R Block Australia, can usually lodge well beyond the October 31 deadline without penalty. The ATO gives tax agents concessional extended deadlines which mean that they can lodge returns on behalf of clients up to 15 May 2026 without incurring any penalty.
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Generally speaking, around 70% of taxpayers use a tax agent, a figure that rises to over 95% for small business owners. If you are entitled (or believe you are entitled) to claim deductions, either for your business or as part of your job, it makes sense to get an expert to prepare your return in order to ensure that you claim all the deductions you are entitled to.
If you think you may not be able to meet the October 31 deadline, you should now be giving serious thought to visiting a tax agent. You MUST be registered with the agent by October 31 in order to benefit from the extended deadline.
So, what actually happens if you don’t lodge a tax return when you’re supposed to? Let’s take a closer look at the potential penalties and implications.
1. Administrative Penalties: Failure to Lodge (FTL) on Time
The ATO can apply what’s called a Failure to Lodge (FTL) on time penalty if you don’t meet your obligations. The penalty is calculated in “penalty units” and currently sits at one penalty unit ($330 as of 2025) for each 28-day period (or part thereof) that your return is overdue, up to a maximum of five penalty units ($1,650) for individuals.
For example:
If your return is one day late, the penalty is $330.
If your return is three months late, the penalty could be $990.
If it’s over five months late, you may be hit with the maximum penalty of $1,650.
For larger entities, such as companies, the penalties can be much higher – up to five times the individual amount, depending on size.
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The ATO often won’t immediately apply penalties to individuals with a good compliance history. However, repeat offenders or those who are significantly overdue can expect the fines to be enforced.
2. Interest Charges on Outstanding Debts
If you owe tax and haven’t lodged, the ATO doesn’t wait politely until you’re ready. Once your return is eventually processed, interest may be charged on any unpaid tax from the original due date. This is known as the general interest charge (GIC).
The GIC is calculated daily and compounds, meaning the longer you delay, the larger the amount grows. Even if you manage to lodge later, the accumulated interest can add hundreds or even thousands of dollars to your tax bill.
Worse still, the GIC is no longer tax deductible, which makes it even more painful!
3. Escalation to Enforcement Action
The ATO has a range of powers to deal with people who persistently fail to lodge. These include:
Default assessments – If you don’t lodge, the ATO may issue an assessment of what they believe you owe based on available data (such as employer payroll reports, bank interest, or share dividends). These assessments are rarely generous – they usually overestimate your liability and don’t take deductions into account.
Garnishee notices – In cases of unpaid tax, the ATO can require your bank, employer, or other third parties to pay amounts directly to the ATO from money owed to you.
Director penalties – If you’re a company director, failure to lodge and pay company tax obligations can make you personally liable.
4. Prosecution and Criminal Penalties
While rare, the ATO can prosecute individuals who continually fail to lodge returns despite repeated requests. Under the law, not lodging a tax return is technically a criminal offence.
Penalties can include:
Fines of up to $4,500 per return that remains outstanding.
In extreme cases, imprisonment for up to 12 months (though this is usually reserved for serious or fraudulent behaviour).
The ATO generally prefers to work with taxpayers to bring them up to date voluntarily, but they will escalate matters if you consistently ignore your obligations.
5. Impact on Government Benefits and Financial Life
Failing to lodge doesn’t just create issues with the ATO. It can also disrupt other aspects of your financial life:
Family Tax Benefit and Child Care Subsidy: These entitlements require up-to-date tax returns. Failing to lodge could mean your payments are stopped or debts raised.
HECS-HELP and Student Loans: Your compulsory repayment obligations are based on your income. If you don’t lodge, you may fall behind and face larger repayments later.
Loan and Visa Applications: Banks, lenders, and even the Department of Home Affairs often require recent tax returns as part of their approval process. Missing returns can delay or derail applications.
6. What To Do If You’re Behind
The good news is that it’s never too late to get back on track. The ATO often takes a more lenient approach if you make a genuine effort to fix the problem before they come chasing you.
Practical steps include:
Contact a tax agent: They can negotiate on your behalf and help you prepare multiple years of overdue returns quickly and correctly.
Use ATO online services: Pre-fill data can help reconstruct your income if you’ve lost records.
Communicate: If you can’t pay, lodge anyway. Lodging avoids FTL penalties and you can set up a payment plan for the tax owed.
Final Thoughts
Not lodging a tax return might seem harmless, especially if you think you don’t owe much tax – but the consequences can snowball quickly. Administrative fines, interest charges, benefit disruptions, and even prosecution are all on the table if you continue to ignore your obligations.
The ATO’s message is simple: it’s better to lodge on time, even if you can’t pay immediately. And if you’re already behind, the sooner you act, the more options you have to minimise penalties and avoid bigger problems.
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