Late tax return penalties for individuals: failure to lodge, GIC and what to do

If an individual lodges a tax return late, the ATO can apply a failure-to-lodge (FTL) penalty of one penalty unit for each 28 days (or part) the return is overdue, up to five penalty units. The Commonwealth penalty unit was $330 from 7 November 2024 and was indexed to $364 from 1 July 2026, according to published Commonwealth tables, so the maximum for most individuals would be 5 × $364 = $1,820 for a failure occurring after that date. Separately, unpaid tax attracts the general interest charge (GIC), compounding daily, from the payment due date. In practice the ATO often does not apply the FTL penalty to individuals who lodge as soon as they can, especially if they contact it early, but you cannot count on that.

This guide explains each charge for individuals lodging their own returns, with examples, and what you can do to reduce them. It does not cover business activity statements or company returns. It is general information; the ATO decides penalties case by case.

The failure-to-lodge penalty

Days late	Penalty units	At $330 per unit	At $364 per unit
1–28	1	$330	$364
29–56	2	$660	$728
57–84	3	$990	$1,092
85–112	4	$1,320	$1,456
113 or more	5 (maximum)	$1,650	$1,820

These amounts apply to small entities, which includes most individuals. The base penalty is multiplied by 2 for medium entities and by 5 for large entities, based on assessable income or turnover, which only affects individuals with very large incomes.

Which penalty unit value applies depends on when the failure occurred; check the ATO's page on failure to lodge on time for the value it uses. A 2025–26 return due on 31 October 2026 (next business day 2 November) that is lodged on 15 January 2027 would be in the third 28-day period, so up to three penalty units could apply.

The ATO can apply the penalty whether or not you owe tax. If you are owed a refund, it is less likely in practice, but the legal liability exists.

The general interest charge

If you don't pay tax by the due date, GIC is charged on the unpaid amount for each day until it is paid.

The GIC rate is the 90-day Bank Accepted Bill yield plus 7 percentage points, set each quarter and published by the ATO. It compounds daily.
The shortfall interest charge (SIC) applies to extra tax arising from an amended assessment, from the original due date until the amended notice, at a lower rate (the base rate plus 3 percentage points).
Interest charges incurred from 1 July 2025 are reported to be no longer deductible; previously GIC and SIC could be claimed as deductions. Check the ATO's current guidance.

Illustrative GIC example: $2,000 of tax unpaid for 90 days at an assumed annual GIC rate of 11% compounding daily costs about $2,000 × ((1 + 0.11/365)^90 − 1) ≈ $55. A debt left for two years at the same rate would grow by about 25%.

Default assessments and other consequences

If you don't lodge at all, the ATO can issue a default assessment based on information it holds, which often overstates your tax because it may not include your deductions. You then have to object or lodge to correct it.

Other consequences of non-lodgment or unpaid debts:

refunds and some government payments can be offset against tax debts;
you may struggle to show your income for a home loan, visa or Centrelink claim;
repeated failure to lodge after notices can lead to prosecution in serious cases.

Reducing or avoiding penalties and interest

Step	What it achieves
Lodge on time even if you can't pay	Avoids the FTL penalty
Use a registered agent before 31 October	Later lodgment date under the program (see deadlines)
Ask for a deferral before the due date	Can extend the date with good reason
Set up a payment plan	Spreads a debt; GIC still accrues but the ATO may be more flexible on penalties
Request remission	The ATO can remit FTL penalties and GIC in whole or part if there were circumstances beyond your control or it is fair and reasonable
Lodge all outstanding years	Long-overdue returns often carry less penalty if lodged voluntarily before ATO action

When asking for remission, explain in writing what happened (illness, a death in the family, natural disaster, system failures, wrong advice from the ATO), what you did to fix it, and your compliance history. The ATO considers each request; a good record helps.

Worked scenario

Illustrative: Maria self-lodges her 2025–26 return on 20 December 2026, about seven weeks late. Her assessment shows $1,400 payable, due 21 days later, and she pays in full immediately.

Lodged in the second 28-day period after the due date: up to two penalty units could be applied.
She lodged voluntarily, had a clean history and paid straight away, so she can ask the ATO not to apply or to remit the penalty if one is raised.
No GIC is charged, because she paid by the due date on her notice.

Had she not lodged until the ATO wrote to her, a penalty would be more likely, and a default assessment could have been issued.

FAQ

Do I get a penalty if I'm owed a refund?

The law allows it, but in practice the ATO focuses on returns that are significantly overdue or where tax is owed. Lodge as soon as you can.

Can my tax agent pay the penalty for me?

You are liable. If the delay was the agent's fault, they may have professional obligations, and you can raise it with the agent or the Tax Practitioners Board.

Is GIC charged on penalties?

GIC can be charged on unpaid penalties and other tax debts after their due date.

Can I object to a penalty?

You can request remission. If the ATO refuses and you disagree with a decision, objection rights may apply; see amendments and objections.

Sources

Australian Taxation Office — failure to lodge on time penalty, general interest charge rates, payment plans, remission
Federal Register of Legislation — Taxation Administration Act 1953, Schedule 1 section 286-80; Crimes Act 1914 section 4AA (penalty unit)
ASIC — published table of Commonwealth penalty unit values