Overdue BAS and Unpaid GST — get your tax obligations back on track with legal protection

Failure-to-lodge (FTL) penalties under Division 286 of the Tax Administration Act 1953 are calculated in penalty units. As of 2024 each penalty unit is $313. The base penalty is one penalty unit for each 28-day period (or part thereof) that the BAS remains unlodged, up to a maximum of five penalty units per BAS. For medium entities the penalty doubles; for large entities it is five times the base. Penalties can therefore accumulate to $1,565 per missed BAS per 28-day period for medium businesses. The ATO can also impose a general interest charge (GIC) on the unpaid GST amount itself, which compounds daily.

The ATO's voluntary disclosure policy under its Practice Statement PS LA 2012/5 (now incorporated into the Taxpayers' Charter and ATO guidance) provides that taxpayers who voluntarily disclose errors or omissions before an audit commences can receive significant penalty remissions — typically up to 75% reduction in the base penalty. The earlier the disclosure, the larger the potential reduction. If an audit has already commenced, the remission is smaller (typically 20%) but still available. Voluntary disclosure must be genuine and complete — partial or misleading disclosures can make the position worse. Legal advice before making voluntary disclosure is strongly recommended.

The ATO operates a Lodgment Penalty Amnesty and Lodgment Compliance Program for businesses with overdue tax obligations. Under this program, the ATO may remit FTL penalties in full for small businesses that lodge all overdue statements within a specified window, and it allows staggered lodgement of multiple periods to reduce the administrative burden. A tax agent or lawyer can negotiate the lodgement timetable with the ATO and apply for amnesty or remission concurrently. It is important not to simply lodge without also addressing the payment position — a lodgement without payment can trigger immediate enforcement action.

Yes. Eligible businesses can pay GST on an instalment basis under the GST instalments regime (Subdivision 162-D of the GST Act) rather than accounting for actual GST each quarter. For businesses already in arrears, the ATO can agree to a payment arrangement — sometimes called a tax payment plan or deferred payment arrangement — under section 255-10 of the TAA 1953. During an approved payment arrangement the ATO will typically pause active enforcement. Interest (GIC) still accrues on the outstanding balance during the arrangement period, but a lawyer can negotiate to have that GIC remitted at the conclusion of the arrangement if all instalments are met.

In serious cases, yes. Knowingly failing to comply with GST obligations — particularly where GST has been collected from customers and deliberately not remitted — can constitute an offence under section 8C or 8N of the TAA 1953 (failure to comply with a requirement) or, in more serious cases, fraud provisions. Criminal prosecution is rare for straightforward compliance failures attributable to financial hardship, but the risk increases where the ATO believes funds were deliberately diverted. Obtaining legal advice before communicating with the ATO in any compliance or investigation context is essential to avoid inadvertent admissions.

Lodging overdue BAS while in financial difficulty is advisable even if you cannot pay the debt immediately — lodging stops FTL penalties from continuing to accumulate and starts the period running for voluntary disclosure purposes. A lawyer can coordinate with your accountant to ensure the lodgements are accurate and complete, then approach the ATO simultaneously to negotiate a payment arrangement and apply for penalty and GIC remission. Where the business is genuinely insolvent, the lawyer can advise on whether formal restructuring should be initiated at the same time to protect the director from personal liability while the tax position is being resolved.