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ATO penalties for incorrect tax return

Navigating ATO Penalties for Incorrect Tax Returns: What You Need to Know 

The process of lodging your tax returns can be overwhelming, especially when you consider the serious financial consequences of making errors. But don't panic just yet; we've got all the updates you need on the Australian Tax Office (ATO) penalties for incorrect tax returns, including the latest changes for 2023–24.


ATO's Enhanced Scrutiny on Taxpayers 

As part of the 2023–24 Federal budget, the ATO has received extra funding to target specific groups: 


  • Public and multinational groups with an aggregate turnover of over $10 million 
  • Privately owned groups or individuals controlling net wealth of over $5 million 


These measures aim to recover high-value outstanding debts of over $100,000 and aged debts older than two years. So, if you fall into these categories, best keep your tax affairs in order to avoid extra scrutiny. 


The Rise in Commonwealth Penalty Unit Rates 

Effective from 1 July 2023, the Commonwealth penalty unit rate has been bumped up to $313, increasing from its January 2023 rate of $275 per unit. This uptick means that late lodgements will incur more substantial financial penalties than before. To put it simply, the more you slack on your lodgement, the heavier the financial hit. 


Types of Returns Affected by Penalties 

If you're tardy in lodging any of the following, expect a penalty: 

  • Activity statements 
  • Income tax returns 
  • FBT returns 
  • PAYG withholding annual reports 
  • Single touch payroll reports 
  • Annual GST returns and information reports 
  • Taxable payment annual reports 

For small businesses, the base penalties for failure-to-lodge range from $313 to $1,565. This amount increases by one penalty unit for every 28 days the lodgment is overdue. 


Small Business Lodgment Penalty Amnesty 

The good news is that the ATO has a lodgment amnesty running until 31 December 2023. This amnesty applies to obligations originally due between 1 December 2019 and 28 February 2022. 


Eligibility Criteria 

If your small business has an aggregated turnover of less than $10 million at the time the original lodgment was due, you're in luck. You can benefit from this amnesty. 


What Should You Do Next? 

First off, send all necessary information to us well before your due date. The sooner, the better, because you really don't want to mess with the ATO's new rates. 


If you foresee delays in lodgment, engage with the ATO directly to discuss your situation. We can help you request an extension, apply for remissions, or set up a payment plan if you're struggling with tax debts. 


Small businesses can also take advantage of the lodgment penalty amnesty by submitting overdue forms before the 31 December 2023 deadline. Doing this will get any associated failure-to-lodge penalties automatically remitted. 


Need Help? 

Got questions or need guidance? Feel free to reach out to us at Coleman Advisory. Our central coast accountants here to make your tax journey less intimidating and more manageable. Let's stay ahead of those penalties, shall we? 

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