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Australian Taxation Office Penalties

By January 4, 2017News

Many of us feel pressure when we are obliged to lodge documents and make payments to the Australian Taxation Office.

Of course the Government needs the funds to try to make ends meet and requires the ATO to collect as much revenue as possible.

One measure that also threatens all taxpayers is the possibility of penalties being imposed. This is another means of collecting revenue and the ATO seems to regard this as a “growth revenue”.

Penalties are calculated on the basis of “penalty units”.
An automated system applies these penalty units when documents are not lodged on time. The documents referred to include not only income tax returns, but also activity statements, PAYG withholding annual reports, fringe benefits tax returns and others.

A penalty unit is $180,00. The Taxation Office can apply up to 5 penalty units for each outstanding document.

Taxpayers sometimes make the mistake of not lodging a document as they do not have the funds to pay the outstanding tax which is due.

It is normally best to lodge documents on time and then negotiate a payment plan with the Taxation Office. Any interest payable to the ATO may be very significantly less than running the risk of penalty units being imposed.

By James Nott, B.Com, CA, CTA