DFK Gooding Partners

August 1, 2023

As of 1 July the ATO penalty units have increased from $275 to $313, applicable to infringements incurred from 1 July 2023 onwards.

Penalty units are used to encourage taxpayers to take reasonable care in complying with their tax obligations. They are relevant for fines imposed under Commonwealth laws, and from a tax perspective are particularly relevant when determining the penalty amounts imposed for making false or misleading statements. Or as we see more commonly, businesses failing to lodge returns and other documents with the ATO on time – known as Failure to lodge (FTL) on time penalties.

How FTL penalties can impact your businesses

The increase from $275 to $313 per penalty unit may seem inconsequential, however for significant global entities (SGEs) the penalty amount is multiplied by 500, amounting to a high financial cost. An SGE that lodges an income tax return later 16 weeks past due date will now be liable for a penalty of $782,500. For large entities, the minimum penalty is $1,565 for an FTL infringement.

Entity type Penalty units per 28 days Minimum FTL penalty
Small entities 1 $313
Medium entities 2 $626
Large entities 5 $1,565
Significant global entities 500 $156,500

To avoid increased penalties, it is important that businesses of all size ensure efficient processes and procedures are in place to allow their tax obligations to be satisfied in a timely manner.

If you require assistance with managing your tax obligations or navigating existing penalty rates from overdue lodgements, please contact us for assistance.

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