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The last day to lodge a tax return on time is 31 October. Waiting past the 31 October tax return deadline could translate to paying late penalties.

Depending on your tax history, you may be granted an extension which will allow you to lodge after the 2016 tax deadline. The length of extension will generally vary from person to person.

 

To be eligible for a tax deadline extension, you must be registered with a tax agent and you must do so before the 31 October 2016 tax deadline.

 

What is an FTL penalty?

A failure to lodge on time (FTL) penalty is an administrative penalty that may be applied where you are required to lodge a return, statement, notice or other document with us by a particular day and you fail to do so.

An FTL penalty may be applied on documents that are lodged late, or on documents that are overdue.

If the ATO apply an FTL penalty, they will issue you an FTL penalty notice.

 

What documents does the FTL penalty apply to?

An FTL penalty is applied when the administration of the tax system is put at risk by taxpayers who do not meet their obligations to supply information as required.

It is applied when an ‘approved form’ is required to be lodged with the ATO by a due date and is not received by that due date. Approved forms include:

  • activity statement
  • tax return
  • fringe benefits tax return
  • pay as you go (PAYG) withholding annual report
  • annual goods and services tax (GST) return
  • annual GST information report
  • taxable payment annual report.

 

How is an FTL penalty calculated?

The amount of an FTL penalty is calculated at the rate of one penalty unit for each period of 28 days or part thereof for which a document is overdue, up to a maximum of five penalty units.

Under most Commonwealth laws, financial penalties are expressed in terms of penalty units instead of dollar figures. Refer to Penalties for penalty unit amounts. From 31 July 2015 onwards, the value of a penalty unit increases to $180 (it was previously $170).

For failure to lodge on time penalty the increased rate will only apply where the first day of the relevant 28-day period or part thereof occurs on or after 31 July 2015. Size tests also apply; taxpayers classified as medium entities will have the penalty amount multiplied by a factor of two, and entities classified as large by a factor of five.

The size of an entity for penalty purposes is related to its assessable income, withholder status or current GST turnover.

The ATO will calculate the period of time the document is overdue from the day the document is due to the day before the document is received.

If the ATO apply a penalty where the document is overdue, they will calculate the amount from the lodgment due date to the day before the penalty is applied. If the maximum penalty allowed by law has not been applied to an overdue document, the ATO may increase the penalty amount at a later date.

Consequently, the longer you take to lodge a document after the due date the higher the penalty amount that may be applied. The maximum amount of an FTL penalty may be applied if the document is not lodged within 113 days of the lodgment due date.

Exampleof FTL penalty calculation

The table below shows the amount of penalty applicable, by entity size, for the period that a document is overdue.

FTL penalty amount according to entity size

Days overdue Small Medium Large
28 days or less $180 $360 $900
29 to 56 days $360 $720 $1,800
57 to 84 days $540 $1,080 $2,700
85 to 112 days $720 $1,440 $3,600
113 days or more $900 $1,800 $4,500

 

What are the size tests used to determine the multiplier?

  • A small entity is an entity that is neither a medium or large entity.
  • A medium entity is a medium withholder for pay as you go (PAYG) income tax withholding purposes; or has assessable income or current GST turnover of more than $1 million and less than $20 million.
  • A large entity is a large withholder for PAYG income tax withholding purposes, or has assessable income or current GST turnover of $20 million or more.

 

Lodge with a registered tax agent

You can use a registered tax agent to prepare and lodge your tax return for you. Registered tax agents are the only people allowed to charge a fee to prepare and lodge your tax return.

Most registered tax agents have special lodgment schedules and can lodge returns for their clients later than the usual 31 October deadline. If you’re using a tax agent for the first time, or using a different tax agent, you need to contact them before 31 October.

You can find a registered tax agent, or check whether a person is a registered tax agent, at the Tax Practitioners Board website.
Don’t procrastinate any longer. Get It Done Today! Call John Jacob Tax Accountants on (03) 8339 4150 to book an appointment.

Alternatively, you can email us at [email protected] for further information. Take care of your tax return now and avoid running the risk of late penalties.