The following are answers to frequently asked questions about the penalty process we use.
How will an FTL penalty be applied?
Any approved form due after 1 July 2000 and not lodged on time may have an FTL penalty applied and a penalty notice issued via automated or manual processes. Generally, the automated process will target late-lodged documents, while the manual process will target documents that remain overdue.
How does the automated process work?
The process automatically applies the penalty to documents that are lodged after the due date for lodgment. These documents include activity statements, tax returns, fringe benefit tax returns, annual GST returns, PAYG withholding annual reports and taxable payments annual reports.
Are there exclusions built into the automated process?
A series of filters have been built into the automated penalty system to exclude FTL penalties being applied to low-risk documents and taxpayers. Generally, one-off or isolated cases of late lodgment will also be excluded.
What is a low-risk document?
Generally, low-risk documents include those that result in a refund. Late-lodged tax returns of non-taxable entities, or activity statements that result in a nil liability, are also considered low risk. Taxable payments annual reports are third-party data reports and are not considered to be low-risk documents.
What is a low-risk taxpayer?
Low-risk taxpayers are generally those that exhibit all of the following characteristics:
- no other overdue lodgment obligations and no outstanding taxation debts
- good previous compliance history – for example, compliance with earlier lodgment or payment obligations, accuracy of statements
- neither a large entity, nor part of a large group.
What is the manual FTL penalty system?
The manual penalty system supplements the automated system. Generally, it will be used to apply a penalty:
- in cases that are excluded from the automated system
- on documents that remain overdue
- in situations of escalating non-compliance
- to high-risk taxpayers.
Examples of documents that may be subject to the manual process include:
- overdue activity statements
- overdue tax returns
- overdue fringe benefits tax returns
- other late-lodged or overdue documents not covered by the automated process, such as the annual GST information report.