What reasons does the ATO accept for penalty remission?

Reasons that usually work

• Serious illness or injury of you, a close family member or the person who runs your books, around the due date. Medical certificates or hospital records make this strong.
• Natural disaster or event such as flood, bushfire, storm damage, fire or theft that affected your premises or records. Insurance claims and photos help.
• Death or family crisis close to the due date.
• Agent or bookkeeper failure. They left, became ill, missed the lodgement or made a mistake. If you gave a registered agent everything in time, safe harbour means the failure to lodge penalty should not apply at all.
• Third party delay. You could not lodge accurately because information from a bank, fund, employer or platform arrived late.
• System outages affecting the ATO, your software or your internet on or near the due date.
• ATO error or delay that caused or extended the problem.
• A first lapse. One late lodgement after years of on time compliance is often remitted with no more than a short explanation.

Reasons that usually do not work

The ATO's published guidance says holiday and work commitments are not accepted on their own. In practice the same goes for forgetting, being busy, not understanding the obligation, and not lodging because you could not pay. Cash shortage is the one that catches most people. It can support interest remission in real hardship, and it is central to a payment plan conversation, but it does not excuse a late lodgement, because you can lodge without paying.

Requests also fail when documents are still outstanding, when the same excuse has been used before, or when the ATO had already warned you and nothing happened.

What strengthens the request

The reason is only half of it. The ATO also looks at how you responded. Four things move the needle:

1. You lodged as soon as the problem cleared, and everything is now up to date.
2. You can show a clean history: on time lodgements and payments in the years before.
3. You have evidence, not just a story. Dates, documents, correspondence.
4. The tax itself is paid or under a plan that is being kept.

Put the request in writing for anything more than a single unit, ask for full remission and say you would accept partial. If penalties and interest have both been charged, address them in the same request but under separate headings, because the ATO applies different tests to each. If you are dealing with a director penalty rather than an ordinary penalty, the rules are different again; see can the ATO remit a director penalty.

What to do next

1. Identify the specific event that caused the late lodgement and note the dates it started and ended.
2. Gather evidence: medical certificates, insurance claims, emails with your agent, outage notices.
3. Lodge anything outstanding, then submit a written remission request with your compliance history.

More questions: 15 ATO interest and penalties questions answered · Full guide: GIC remission