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 your local H&R Block office 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.

What if I don't need to lodge a tax return?

If you earned less than $18,200 and didn't pay any tax you may not be required to lodge a tax return however it is important that you 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-lodegment advice, the ATO will assume you need to lodge and may take compliance action to force you to lodge.

H&R Block can prepare and lodge a non-lodgement advice for you. Visit your local office for help. 

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.

The 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.

From 1 July 2017, the value of a penalty unit will increase to $210 so the maximum penalty will can be applied for an individual will rise to $1,050.

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.

As these assessments are estimations, they are rarely entirely correct and often show a higher tax liability than the taxpayer actually owes since they often don't take into account items like deductions. 

Taxpayers are able to appeal 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.

What should I do now?

If you're behind with one or more tax returns, the ATO will catch up with you and will take action. You should take preemptive measures against this and get your tax returns up to date as soon as possible. H&R Block can make the process of catching up as painless as possible. Where there is a possibility that penalties can be remitted, we will make a case for you to the ATO. If you have missing income information, we will often be able to fill in the gaps by obtaining pre-filled information sent to the ATO by third parties such as banks and employers. Where you haven't kept records of deductions, we will work with you to establish what you can claim.

More information

H&R Block can help you minimise the risk by lodging a late tax return on your behalf. You can also lodge your on-time return online or in one of our many office locations around Australia.

H&R Block can help

We can identify exactly what you need to do to get into shape for the tax season and maximise your refund.

This information is intended as a guide for H&R Block clients. Personal details and circumstances differ, please discuss your situation with a H&R Block Tax Consultant.

June 2017

Book a tax return appointment

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

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Book a tax return appointment

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

Book now