Final Notice to Lodge ATO


So, you have received a letter from the Australian Taxation Office (ATO). Whatever you do, do not panic.

The letter will usually be a request for you to provide the Tax Office with information, a request to furnish a document, a demand that you pay a debt, or to simply put you on notice that you are about to be the subject of an audit.


Ignoring Such Requests Is Not Recommended


The Tax Office has vast powers that allow it to compel taxpayers to comply with its request and demands.

Ordinarily, a notice of this nature requests a taxpayer to lodge Income Tax returns or Business Activity Statements by a particular date.

It is an offence under the Taxation Administration Act to fail to comply with a ‘Final Notice to Lodge’.

Failure to comply with a ‘Final Notice to Lodge’ will invariably result in the taxpayer being prosecuted.

If you are in South Australia, that means you will find yourself facing criminal prosecution in the Magistrates’ Court.

The maximum penalty for each failure to lodge for an individual taxpayer is $9,000 and/or imprisonment.

Corporate taxpayers (companies) cannot be imprisoned, but the maximum penalties are 3 times greater for companies than the maximum penalties for individuals.

If the taxpayer is being prosecuted for a second time, the penalties are significantly greater.


Taxpayer Compliance


Ensuring taxpayers are compliant with reporting obligations seems to be the primary goal for the Tax Office: collecting tax debts appears to take a back seat to ensure lodgement.

What should you do if you receive a ‘Final Notice’?

In short, immediately speak with your solicitor and accountant.

From a strategic perspective, you must ensure that the outstanding returns are at least prepared in a draft format.

A tax solicitor will be able to provide you with a strategy, with respect to which returns to lodge first.

In doing so, they will consider general interest charge and failure to lodge penalty consequences; whether an application for remission of general interest charge and or failure to lodge penalties is appropriate; and of course, whether the taxpayer is entitled to a refund from the Tax Office.

Once a strategy is agreed upon, the taxpayer ought to lodge (if that is the solicitor’s advice).

Once lodged, the threat of prosecution evaporates, provided lodgement occurs before the Tax Office files and serves its Complaint and Summons (out of the relevant Court).


What Should You Do if You Have Received a Complaint & Summons But Did Not Receive a ‘Final Notice’?


Remember, the offence is the failure to comply with the terms of the ‘Final Notice’, not the failure to lodge by itself.

If the taxpayer has not been served with the ‘Final Notice’, a not guilty plea ought to be made at the earliest opportunity and the matter set down for a pre-trial conference.

Remember, it is a defence to a complaint alleging failure to comply with a ‘Final Notice’ if the notice was never served on the taxpayer.

Just because the Tax Office avers that the notice was properly served, does not mean that it was.

Do not forget, the Tax Office bears the burden of proof to the criminal standard, beyond reasonable doubt, that all elements of the offence are proved.

From experience, the Tax Office is not overly keen to take matters of this nature to trial.

Remember, an adverse finding against the Tax Office may have far-reaching consequences – not just to the taxpayer being prosecuted but to all taxpayers.


The Tax Office’s Concerns About Potential Precedent & Its Implications


There are many facets to properly dealing with the threat of prosecution or actual prosecution by the Tax Office.

The vast powers that the Tax Office has includes legislative provisions for it to request a court of appropriate jurisdiction to order the taxpayer to lodge.

Failure to comply with orders of a Court is a very serious matter.

Aside from the fines that may (likely) be imposed if a taxpayer is successfully prosecuted, other consequences potentially arise depending on the taxpayer’s individual circumstances.

Generally speaking, taxpayers that have been prosecuted must lodge their future tax returns earlier than those taxpayers who have a good compliance record.

Taxpayers employed by the Australian Public Services may be in breach of the APS Code of Conduct.

The ability of a taxpayer to travel to Australia may be compromised if the taxpayer has a criminal conviction.


Tax Office Issues & Assistance


Adrian Bambrick is an experienced solicitor specialising in tax controversy matters, including tax office prosecutions.

Adrian’s tax practice covers:


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Related Blog – ATO Audits: Can They Be Avoided?

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