Most taxpayers who earn more than the tax-free threshold – currently $18,200 – are required to lodge a tax return. In some cases, you may be required to lodge even if you earn less than that amount, for example if you worked and had tax deducted from your pay (check with one of our offices whether your circumstances require you to lodge).

If you don’t lodge a tax return, the ATO can apply a number of sanctions and penalties to either force you to lodge or to penalise you for not having lodged on time.

Non-lodgment advice

If you don’t need to lodge a tax return, you should submit a non-lodgement advice to the ATO instead. This document explains to the ATO that you don’t need to lodge this year and ensures they don’t list you as having an outstanding return which still needs to be lodged. If you don’t file a non-lodgment advice, the ATO will assume you need to lodge and may take compliance action to force you to lodge.

Penalties for not lodging

In the first instance, the ATO will impose a Failure To Lodge (FTL) penalty on you where your tax return is not lodged by the due date.
FTL penalty is calculated at the rate of one penalty unit for each period of 28 days or part thereof that the document is overdue, up to a maximum of five penalty units. The value of a penalty unit is currently (since 31 July 2015) $180 so the maximum penalty which can be applied for an individual is $900.

The penalty is normally applied automatically but is not normally applied to returns that either have a nil result or generate a refund.
Where a penalty is applied, the ATO will sometimes remit it where it is “fair and reasonable to do so”, for example in the event of natural disaster or serious illness.

Default assessment

Where a taxpayer continues to fail to lodge a return, particularly where the failure to lodge encompasses several years-worth of returns, the ATO can issue the taxpayer with one or more default assessments.

This is basically an estimated assessment of the taxpayers income, based on data held by the ATO about the taxpayer or similar taxpayers. Because these assessments are estimated, they are rarely entirely correct and often show a higher tax liability than the taxpayer believes is correct.
Taxpayers can appeal against a default assessment but they MUST be able to show what their actual tax liability was. Simply arguing that the ATO’s figures are not correct is not enough.

Although unusual, the ATO can and does prosecute taxpayers for failing to lodge tax returns. The maximum penalty which can be applied on prosecution is a fine of $8,500 or imprisonment for up to 12 months.


It is widely believed that taxpayers who lodge late are at increased risk of being reviewed or audited by the ATO.

More information

H&R Block can help you lodge your tax return. You can lodge online or in one of our many office locations around Australia.


July 2016

Book a tax return appointment

Find your nearest H&R Block office and book a tax return appointment.

Book now

Book a tax return appointment

Find your nearest H&R Block office and book a tax return appointment.

Book now