Final Notice to Lodge ATO

Receiving a letter from the Australian Taxation Office (ATO) can be concerning, particularly if it is a ‘Final Notice to Lodge’.

This type of notice is usually a request to provide information, submit outstanding tax returns or Business Activity Statements (BAS), or settle an outstanding tax debt. In some cases, it may indicate that the ATO is considering further action, including an audit or prosecution.

Ignoring such notices is not recommended, as failure to comply can result in significant penalties.

Understanding the Consequences

The ATO has significant powers under the Taxation Administration Act 1953 that compel taxpayers to comply with such notices.

Ordinarily, a Final Notice requires a taxpayer to lodge overdue Income Tax returns or BAS by a specific deadline.

Failure to comply is a criminal offence.

If you’re in South Australia, this may mean criminal prosecution in the Magistrates’ Court. For individual taxpayers, the maximum penalty per offence includes a fine based on penalty units and/or imprisonment.

As of 1 January 2025, one penalty unit is $330, following the latest indexation by the Commonwealth Government, and penalties increase based on the size of the entity and the duration of the non-compliance. Corporate taxpayers face up to five times the maximum penalty applicable to individuals.

For repeat offences, the penalties are significantly higher.

Taxpayer Compliance

The ATO appears more concerned with ensuring compliance with lodgement obligations than with immediate tax debt recovery.

So, what should you do if you receive a Final Notice?

In short: speak with your solicitor and accountant immediately.

Strategically, your priority is to have all outstanding returns at least prepared in draft form. A tax solicitor will advise you on:

The order in which to lodge outstanding returns,
Whether to apply for remission of interest or penalties, and
Whether you’re entitled to a refund.

Once a strategy is confirmed, and returns are lodged, the threat of prosecution generally subsides – provided lodgement occurs before the ATO files and serves its Complaint and Summons.

What If You’ve Received a Complaint and Summons – But No Final Notice?

It is important to understand that the offence lies in failing to comply with a Final Notice, not simply failing to lodge.

If you were not served with the Final Notice, a not guilty plea should be entered, and the matter set down for pre-trial conference.

It is a legal defence to argue that the ATO did not properly serve the notice.

The ATO bears the criminal burden of proof – beyond reasonable doubt – that all elements of the offence are satisfied. In our experience, the ATO is generally reluctant to proceed to trial in these circumstances, due to the potential for an adverse precedent.

Broader Implications of Prosecution

The ATO also has powers to seek court orders compelling lodgement. Disobeying such orders can have serious consequences beyond fines, including:

Restrictions on future tax return lodgement deadlines,
Breaches of employment obligations (such as the Australian Public Service Code of Conduct),
And potentially, impacts on visa or travel eligibility if a criminal conviction is recorded.