Overdue tax returns: what happens and how to catch up

Overdue tax returns can still be lodged

Overdue tax returns can be lodged for prior years, and the Australian Taxation Office (ATO) says getting up to date as soon as possible reduces the risk of penalties and interest.

A late return does not always bring a penalty. The ATO says it generally doesn't apply penalties in isolated cases of late lodgement, and that it will warn you by phone or in writing before applying a failure to lodge penalty. The ATO also says it may apply penalties where non-compliance escalates, for example where a taxpayer has not lodged after a request to do so.

The ATO gives three ways to lodge a prior year tax return:

• online with myTax, available for 2016 onwards, and for 2014 and 2015 if you are eligible
• through a registered tax agent
• on a paper tax return.

For 2013 and earlier, online lodgement isn't available, so an agent or paper is the route.

This guide is general information for Australian taxpayers. The right course for your own returns depends on your circumstances, which a registered tax agent can assess.

First steps when you have overdue tax returns for several years

Start by finding out exactly which years are open, because everything else depends on that list. The steps below are one way to sequence this, built from ATO guidance. They are not an ATO procedure.

1. See what the ATO lists as not lodged. Sign in to myGov, select ATO, select Manage tax returns, then open the Not lodged tab. The ATO's Do I need to lodge? tool sits there for each income year from 2018-19. A web version goes back to 2012-13.
2. Clear the years that need no return. The ATO says you usually still need to tell it when no return is needed, using a non-lodgment advice. That can be done online for income years back to 2000. It isn't available for a year where ATO records show an active Australian business number (ABN), pay as you go withholding or instalments.
3. Read every ATO letter and write down the dates. A final notice or a default assessment warning letter sets a date, and those years come first.
4. Gather the figures for each remaining year, using the ATO records described in the next section.
5. Lodge in a deliberate order, using the priority table further down.
6. Then deal with the money: request remission of any penalty, and look at a payment plan if tax is owing.

If illness, family violence, a natural disaster or another life event caused the delay, the ATO says it has specialised staff who can work with you on flexible options, which could include extra time to lodge or pay.

What the ATO already knows about your overdue years

The ATO can already see a lot of your income and transactions, because third parties report them. According to the ATO, more than 600 million transactions are reported to it each year. Examples it lists include:

• investment income from banks and other financial institutions
• payments to employees and contractors from employers
• pensions, benefits and taxable grants from government bodies
• share transactions from stock exchanges and share registries
• real property sales and transfers from state title offices and revenue agencies
• motor vehicle sales and transfers from state and territory registering bodies
• online sales from online selling platforms
• cryptocurrency purchases and sales from cryptocurrency service providers.

The ATO uses this data to pre-fill tax returns. It also says that if you change pre-filled data when you lodge, it may adjust the figure back where it has high confidence in what it received.

In ATO online services, you can review and print lodged tax returns and notices of assessment from 2010 onwards, and income statements from July 2019 onwards if your employer reports through Single Touch Payroll. The ATO says you may need to phone for returns from 1997 to 2009, or for payment summaries from 2002 onwards where the employer does not report that way.

For individuals, the ATO says written evidence must generally be kept for 5 years from the date you lodge your tax return. Business records can follow a different start date. If records were lost or destroyed, the ATO may grant relief in limited situations, and our guide on claiming tax without receipts explains the limits on claims without paperwork.

Which year to lodge first: dated notices, then tax owing, then refund or nil years

The order below is one way to sequence several overdue years. It applies ATO rules but is not itself an ATO rule, and your circumstances may call for a different order.

Whichever order you use, returns for 2013 and earlier can't be lodged online, so they need an agent or a paper return.

When several tax returns are overdue, one workable order is to lodge any year named in a final notice or default assessment warning letter first, and years likely to show a refund or nil result after years likely to show tax owing.

A late individual tax return can cost up to $1,820 in failure to lodge penalty

For an individual, a return that becomes overdue on or after 1 July 2026 can attract a failure to lodge penalty of up to $1,820. According to the ATO, the base penalty is one penalty unit for every 28 days, or part of 28 days, that the document is overdue, up to a maximum of 5 penalty units. The ATO lists the penalty unit at $364 for infringements on or after 1 July 2026.

Older infringements use the lower unit amount the ATO lists for that period, so the 5-unit maximum is lower for them.

Earlier periods use lower amounts again.

The base amount is multiplied by 2 for an entity that is a medium withholder and by 5 for one that is a large withholder. The ATO notifies a penalty in writing, with a due date at least 14 days after the notice, and it says you can't claim a deduction for penalties it imposes.

The failure to lodge penalty is for lateness, and interest is for unpaid tax

The failure to lodge penalty relates to a document lodged late. The general interest charge, or GIC, can apply when an amount of tax remains unpaid after the date it should have been paid, and the ATO lists a return being lodged late among the situations where that can happen.

For October to December 2026, the annual GIC rate is 11.51% and the daily rate is 0.03153425%. On an unpaid $1,000, that daily rate works out at about 32 cents for the first day. The ATO says GIC compounds daily, so the amount grows the longer the debt remains. The ATO updates the GIC rate quarterly.

This difference matters for planning. A refund year generally won't bring a penalty notice, although exceptions apply, such as a penalty applied before lodgement. A year with tax owing can build up interest until the debt is paid. If you can't pay in full and are experiencing financial difficulties, the ATO says you may be eligible for a payment plan, and that debts on a plan keep accruing GIC. Our guide to ATO payment plans explains how they work.

How to request remission of a failure to lodge penalty

Lodge first, then ask. The ATO says you will be expected to lodge your outstanding documents before you request remission, and it lists not having lodged as a reason it would likely decline.

1. Download the current form. The ATO provides a failure to lodge remission application form and says it may update its forms regularly, so download it for each application. Interest needs its own separate form.
2. List every lodgement. The form says the ATO will only review penalties for the lodgements you list.
3. Explain what happened. The form asks what events affected your ability to lodge, how they caused the delay, the dates they began and stopped, and why you didn't request more time.
4. Attach evidence. The ATO's examples include medical certificates, letters from tax professionals, financial statements, police reports and court orders. It also says it will look at its own information, including your lodgement and payment history and assets you own.
5. Submit it. Individuals can phone or mail. Sole traders with an ABN and businesses can also submit through online services. Phone requests over $2,500 go to a dedicated team, so no immediate decision is given.

The form says the penalty is expected to be paid even while you request remission, and that any amount remitted is credited to your account. The ATO may remit all, some or none of the penalty.

The ATO says it would likely decline remission for being on holiday or busy with work, and would likely accept severe illness or a disaster such as fire or flood.

The ATO stresses that this is a guide only, and that each case is reviewed on its merits. If your registered agent was responsible for a late lodgement, ask about safe harbour. Safe harbour can remove the penalty where you gave the agent all relevant information in time and the agent's failure wasn't reckless or intentional.

Ignoring overdue returns can lead to a default assessment or prosecution

The ATO says it uses firmer action when people are unwilling to work with it or don't meet agreements to lodge. It lists these steps:

• Final notice. A legal document requiring you to lodge by a particular date.
• Default assessment. The ATO assesses your income without your return, using sources such as earlier lodgements, income reported by banks and employers, and benchmarks. An administrative penalty of 75% of the tax-related liability may apply, rising to 90% in certain circumstances for a pattern of non-compliance, and a failure to lodge penalty can apply on top.
• Audit. The ATO can ask for documents such as bank statements for the period you have not lodged.
• Retained refund. The ATO says it only considers keeping a refund in exceptional circumstances, where it has reasonable grounds to believe you are engaged in high-risk behaviours.
• Prosecution. The ATO says failing to lodge is a criminal offence, and that a conviction can bring additional fines.

The ATO says it will usually send a warning letter before a default assessment, and that it notifies you of its intentions and allows time to catch up before prosecution action starts. If you disagree with a default assessment, the ATO says you must lodge an objection, and you may also consider objecting to the penalty.

When a registered tax agent is worth involving

Several overdue years, a final notice, a default assessment warning letter or a business with unlodged business activity statements (BAS) are all situations where the next step depends on your details, so a registered tax agent is the right person to assess them. Our business activity statements guide covers how BAS works. According to the ATO, registered tax agents are the only people who can charge a fee to prepare and lodge a tax return. You can check a person's registration on the Tax Practitioners Board website, and the ATO says an agent can prepare and lodge prior year returns for you.

Lomandra Accounting is a CPA practice registered with the Tax Practitioners Board. On overdue BAS and late tax returns, the practice says: "We reconcile transactions, prioritise lodgements to limit penalties and work with the ATO on realistic payment plans where needed." The ATO, not Lomandra Accounting, decides any penalty, so no accountant can promise an outcome. The practice works online by phone, video and email, wherever you are based in Australia.

If tax is already owing, read how ATO payment plans work next. To talk through your own overdue years, contact Lomandra Accounting. The services and tax accountant on the Sunshine Coast pages have more about the practice.