What is ATO penalty remission?
Penalty remission is when the ATO reduces or removes penalties and, in some cases, interest that has been applied to your account. You can request remission after you fix the underlying issue (for example, lodging overdue BAS or tax returns) or at the same time as you finalise those lodgments.
Remission is assessed on its merits. You will get the best outcome by explaining what happened, when it happened, why it was outside your reasonable control, and how you have prevented a repeat. Attaching evidence is essential.
Types of ATO penalties and interest that may be remitted
- Failure to Lodge (FTL) penalty: Charged when activity statements or returns are late. It increases in 28‑day blocks up to a maximum and scales with business size. Strong reasons and a good history can support remission.
- General Interest Charge (GIC): Daily interest on overdue amounts. The ATO can remit GIC in part or full where delay wasn’t your fault, there was ATO delay/error, or paying interest would be unfair in the circumstances.
- Shortfall penalties: Apply when there is a shortfall due to behaviour (for example, failure to take reasonable care, recklessness, or intentional disregard). Rates vary. Remission can be considered based on behaviour, voluntary disclosure, and mitigating factors.
If a balance still remains after remission, combine your remission request with a realistic payment plan to manage cash flow.
When the ATO may remit penalties
- Exceptional circumstances: serious illness, hospitalisation, bereavement, natural disaster or other events beyond your control.
- ATO error or system issues: incorrect advice, portal outages, or processing delays that affected your ability to lodge or pay.
- Agent safe harbour: you provided all information to a registered agent on time, but they failed to lodge by the due date.
- Voluntary disclosure and quick correction: you identified an error and corrected it promptly.
- Good compliance history: a strong track record can support remission for an isolated lapse.
Remission is less likely where non‑lodgment or non‑payment was simply due to forgetfulness or ongoing cash‑flow choices with no corrective plan.
How to request penalty remission (step‑by‑step)
1) Fix the cause
Lodge any overdue BAS or tax returns and correct errors. If you can’t lodge everything immediately, agree to a staged plan with your accountant or BAS agent.
2) Draft your case
State the penalty type, period and amounts. Explain what happened, with dates, and why it was outside your control. Describe what’s changed to prevent a repeat.
3) Attach evidence
Provide hospital letters, insurance or disaster notices, screenshots of ATO outages, emails showing agent handover, or any documents that support your timeline.
4) Lodge the request
Submit via Online services for business (secure mail), ask your registered agent to submit, call the ATO if needed, and keep reference numbers. Follow up politely if no response.
Timeframes vary. Simple FTL or GIC remissions can be turned around quickly; complex shortfall matters may take longer and may require further information.
If remission is declined
Ask for an internal review and provide any new facts or documents. For certain penalties (for example, shortfall penalties), you may be able to lodge a formal objection within the time limits. If the debt remains, consider a payment plan while your review is in progress. If you’re dealing with complex correspondence, see ATO correspondence help and objection support.
Australian context to keep in view
- Remission decisions are discretionary and guided by ATO practice statements and policy. Clear facts and evidence carry more weight than broad explanations.
- Lodgment first, remission second: in most cases, getting your BAS and returns up to date improves your chances.
- Voluntary disclosure and cooperation can reduce shortfall penalties significantly and speed up resolution.
- If your books are behind, coordinate remission with bookkeeping cleanup and BAS lodgments to avoid repeat penalties.
What to compare before you commit
Scope
Confirm the provider will prepare evidence, draft the remission request, lodge it, respond to ATO queries, and align it with any required BAS/tax lodgments and a payment plan.
Software fit
Check their experience with your stack (Xero, MYOB, QuickBooks) and that they can quickly reconcile and produce accurate lodgment data.
Turnaround and communication
Ask how fast they can triage lodgments, who contacts the ATO, expected response times, and how updates are shared during peak periods.
Commercial fit
Compare fixed‑fee vs hourly, likely ATO timeframes, and whether you need tax expertise only or broader accounting support.
Best next steps
List the penalties you want remitted, the periods involved, and a short timeline of what happened. Gather evidence, bring lodgments up to date, and decide whether to submit yourself or through an agent. Use the pages below to move into the most relevant subtopic before you make contact.
- Overdue BAS or need a plan? See BAS debt help and BAS agent services.
- Complex letters, reviews or objections? See ATO correspondence help, ATO review help and ATO objection support.
- Need broader support? Explore the accounting services hub or find an accountant.
Frequently asked questions
What is ATO penalty remission?
It’s when the ATO reduces or removes penalties or interest already applied to your account. It commonly covers FTL penalties and GIC, and can apply to shortfall penalties depending on behaviour and disclosure. You’ll need clear reasons and supporting evidence.
Can Failure to Lodge (FTL) penalties be remitted?
Yes. Strong cases usually involve exceptional circumstances, ATO error or outages, agent safe harbour, or a strong compliance history with an isolated lapse. Lodging the overdue forms before requesting remission usually helps.
Can the ATO remit General Interest Charge (GIC)?
Yes. GIC can be remitted in part or in full where delays weren’t your fault, there was ATO delay, or charging interest would be unfair. Explain the timeline and include evidence.
How long does a remission request take?
Simple matters can be resolved quickly; complex or evidence‑heavy cases can take longer. Submit a clear, well‑evidenced request and follow up with reference numbers.
What if my remission request is refused?
Request an internal review and provide new information. Some penalties (for example, shortfall penalties) allow a formal objection within the time limits. Consider a payment plan while you seek review.