Small business proprietors have a limited 25-day window to rectify overdue forms using the Small Business Lodgment Penalty Amnesty Program.
The amnesty, concluding on December 31, 2023, specifically targets late lodgment penalties for small business income tax returns, fringe benefits tax (FBT) returns, and business activity statements (BAS) initially due between December 1, 2019, and February 28, 2022.
Since its launch on June 1, 2023, over 14,000 small businesses have capitalized on the amnesty, resulting in the remittance of more than $48 million in failure-to-lodge (FTL) penalties. Directors aligning their company lodgments with the specified period can also benefit from FTL penalty remittance, applicable to eligible lodgments made between June 1 and December 31, 2023.
The Lodgment Penalty Amnesty Program, introduced in the 2023-2024 federal budget, offers relief to small businesses with an aggregated annual turnover below $10 million, allowing them to disclose overdue payments to the tax office without incurring significant penalties. This initiative covers payments originally due between December 1, 2019, and February 28, 2022, encompassing a challenging period marked by bushfires, floods, and the economic upheaval triggered by the COVID-19 pandemic.
The tax office’s leniency during this tumultuous period is drawing to a close, as it aims to recover an estimated $30 billion in overdue taxes. Numerous eligible small businesses have already availed themselves of the lodgment penalty amnesty, and if you haven’t, time is of the essence—only until December 31 to participate.
When submitting eligible income tax returns, business activity statements, and fringe benefit tax returns, failure-to-lodge penalties will automatically be remitted without the need for a separate application. To qualify for the amnesty, businesses must meet specific criteria, including an annual turnover under $10 million when the original lodgment was due, overdue returns falling between December 1, 2019, and February 28, 2022, and lodgment between June 1 and December 31, 2023.
However, the amnesty excludes privately owned groups and individuals with control over $5 million of net wealth. Directors aligning their company lodgments within the stipulated timeframe can also have penalties remitted, especially if they rely on company lodgments to finalize their tax affairs. This provision applies to eligible lodgments made between June 1 and December 31, 2023.
In the event of incurring a debt, prompt full payment is recommended. Yet, for those facing financial challenges, eligibility for setting up a payment plan exists. Payment plans necessitate an initial upfront payment and should be expedited to completion within the shortest possible time.
ATO Assistant Commissioner, Jillian Kitto says this amnesty is the perfect opportunity for small businesses to re-engage with their tax affairs and get back on track with their lodgment obligations without penalties.
“All you need to do to take advantage of this opportunity is lodge, and we will remit any failure to lodge penalty.”
“Having up-to-date lodgments is important, as it will give you a better understanding of your true financial position and ensure you can make informed decisions about your priorities and future planning,” said Ms Kitto.
If a small business has ceased trading, they need to advise their registered tax professional, or contact the ATO directly to seek assistance with finalising their tax obligations, which may include lodging overdue returns, cancelling their ABN and paying any amounts overdue.
While penalties will be remitted under the amnesty, if a business finds themselves with a tax debt after their overdue forms are lodged, it’s important they pay in full to avoid further interest charges or check the ATO website to see if they are eligible for a payment plan.
More information is available on the ATO website, including:
- Lodgment Penalty Amnesty Program
- Help with paying – Changing, pausing, closing or selling your business
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