Can a failure to lodge penalty be waived?
Short answer
Yes. The ATO can remit a failure to lodge (FTL) penalty in full or in part, and it does so regularly where the delay was caused by something outside your control or it was a one off lapse by someone with a good history. You need to lodge the outstanding document first, then ask. Our penalty remission guide has the full process; this is the short answer.
When the ATO usually says yes
The ATO's own guidance says it takes into account circumstances that prevented you lodging on time. The requests that succeed usually involve one of these:
- Serious illness, injury or hospitalisation of you, a family member or the person who does your books.
- Natural disaster, fire, flood or theft affecting your records.
- A death or family crisis around the due date.
- Information you needed from a third party that arrived late.
- A tax agent or bookkeeper who left, failed or made an error.
- An ATO or software outage on or near the due date.
A single late lodgement after years of clean compliance is often remitted in full, sometimes on the phone. The ATO is trying to change behaviour, not punish an isolated slip.
When it usually says no
The ATO's published position is that being busy at work, being on holiday, or simply forgetting do not on their own justify remission. Neither does being short of cash. Not lodging because you could not pay is a common story and a bad one, because you can lodge now and pay later. Repeated late lodgements, ignored reminders and documents that are still outstanding at the time of the request all weigh against you.
If cash is the real problem, keep the two issues apart. Lodge on time, ask for remission of the penalty on its own merits, and deal with the money through a payment plan.
Want a late lodgement penalty removed?
A specialist can tell you whether your reason is one the ATO accepts.
Safe harbour if you use an agent
If a registered tax or BAS agent lodged late but you gave them all the information they needed in time, the penalty should not be imposed on you at all. This is called safe harbour. It does not apply where the agent was reckless or deliberately ignored the law, but an ordinary agent error or backlog is covered. If you are in this position, say so plainly in the request and, if you can, show when you sent the documents to the agent.
How to ask
Lodge first. Then request remission through ATO online services, the ATO's remission form, or by phone on 13 11 42 for a small amount. Keep it factual: the document and period, the date it was due and the date it was lodged, what happened and when, what you did to lodge as soon as you could, and your lodgement history. Attach evidence. Ask for full remission and say that partial would be accepted. If the answer is no and the remaining penalty is more than two penalty units, you can ask for the decision to be reviewed. Interest on any unpaid tax is a separate request; see GIC remission.
What to do next
- Lodge the return or statement the penalty relates to, because the ATO will not consider remission while it is outstanding.
- Write down what stopped you lodging on time, with dates and any evidence.
- Send a remission request through online services or call 13 11 42 for a small amount.
Related questions
Is there a deadline to ask for FTL penalty remission?
No fixed deadline. Remission is a request to the ATO to exercise its discretion, so you can ask at any time. The sooner you ask the better, though, because the ATO can start collecting an unpaid penalty and charging interest on it in the meantime.
Does interest run on an unpaid failure to lodge penalty?
Yes. A penalty is a debt on your account like any other, and general interest charge runs on it from the date the penalty falls due if it is not paid. If the penalty is later remitted, the interest on it is usually removed as well.
Want a late lodgement penalty removed?
A specialist can tell you whether your reason is one the ATO accepts.
Get help nowMore questions: 15 ATO interest and penalties questions answered · Full guide: GIC remission