What to Know About ATO Remissions
Received an ATO penalty? Learn how to request a remission to reduce or cancel fines for late BAS, PAYG, or tax lodgements.
One of the reasons it’s so important for us to work with clients, ensuring that what needs to be lodged is done so and on time, is that the ATO doesn’t shy away from penalising those who don’t. Sometimes, something slips through the cracks in the mayhem of owning your business, and you’ll find yourself with a less-than-ideal message from the ATO. You’re able to apply for a remission of the penalty if you meet certain criteria. Read on to find out how.
Top Highlights:
- ATO remissions can reduce penalties: Businesses can request a remission for penalties like late BAS lodgement or missed PAYG if they have a valid reason and a good compliance history.
- You must meet specific conditions: Before applying, ensure all outstanding lodgements and payments are up to date and be ready to provide supporting evidence and a commitment to improve.
- Request processing takes time: The ATO typically reviews remission requests within 28 to 56 days. If denied, businesses can appeal or seek further assistance from their accountant.
What Is an ATO Penalty Remission?
An ATO penalty remission is a formal request to reduce or remove a penalty that has been applied to your business for non-compliance. Usually, things like late BAS lodgments, missed tax payments, or incorrect claims.
Common ATO Penalties That Can Be Remitted:
- Late lodgment of Business Activity Statements (BAS) or tax returns
- Failure to pay PAYG withholding or super guarantee
- Incorrect tax deductions or reporting errors
Tip: A first-time penalty often starts with a warning. Multiple or repeated issues increase the likelihood of fines.
Who Can Apply for a Remission?
Not every situation qualifies, but many do. You’ll need a valid reason and a clean-ish history.
| Eligible Applicants | Not Eligible If |
| – Small business entities – Sole traders – Taxpayers with good compliance history | – You’ve previously ignored ATO warnings – You’re a repeat offender – You haven’t resolved outstanding lodgments or payments |
How do ATO penalties work?
The ATO may apply penalties to your account where you have not complied with your tax obligations. Penalties can be applied for conduct such as late lodgements, late tax payments and for claiming deductions you are not entitled to.
The ATO will take your circumstances into consideration when determining whether or not a penalty will apply. In the case of late lodgement penalties, the ATO may assess your lodgement history and the frequency of these events occurring. In most cases of an initial late lodgement, the ATO will issue a warning to you in writing.
How do I request an ATO remission?
Any outstanding lodgements and/or payments need to be up to date before you can request remission of a penalty.
You can contact the ATO to request remission directly via phone or mail. Alternatively, we can assist in submitting a penalty remission request on your behalf. You need to ensure that you have adequate reasoning to support your request for remission and explain the steps you are taking to demonstrate how you will avoid this occurring in the future.
How do I request an ATO remission?
If you’ve received a penalty notice from the ATO, don’t panic; there’s a process in place to request a remission (aka reduction or waiver). However, before you begin writing a request, there are a few important steps to take first.
Before you apply for a remission, make sure the following are sorted:
- All overdue lodgments and payments must be up to date
- You must submit a written request or call the ATO directly
- Provide a valid reason and evidence showing steps to improve compliance
When it comes to submitting a remission request, you’ve got a few options depending on what works best for you. You can call the ATO directly to make your case over the phone, or you can put it in writing and send it by post. If you prefer to go digital, you can lodge your request through ATO Online Services using your myGov account or the Business Portal. Of course, if paperwork isn’t your thing, your tax agent can handle the entire process on your behalf, making sure everything is submitted clearly and correctly.
What to Include in Your Remission Request Letter
| Section | Details |
| Introduction | Reference the penalty notice and date |
| Reason for Delay | Be honest and specific, e.g., illness, tech outage, natural disaster |
| Supporting Evidence | Attach relevant documents, like a doctor’s certificate or system log |
| Commitment Statement | Outline what changes you’ve made to prevent it from happening again |
| Signature | Signed by you or your tax agent |
What Happens After You Apply?
- Review Time: Up to 56 days
Once you’ve submitted your remission request, the ATO will review your case, typically within 28 to 56 days. After the review, you’ll receive a formal response by mail or through your online ATO account. This letter will let you know whether the penalty has been fully remitted, partially reduced, denied, or if the ATO needs additional information to make a final decision.
What does the ATO take into consideration when a remission is requested?
The ATO will assess each remission request independently and take into consideration the following items:
- Your compliance history
- Whether tax was deferred or avoided
- How they became aware of any tax shortfalls
- Your attitude towards complying with tax laws
- Your reasoning and the events that led to the conduct that resulted in the penalty
Should your remission request not be successful, there are further steps you can take to object to the ATO’s decision. Further information regarding ATO penalties, remissions and objections can be found via the ATO website.
To ensure you remain compliant and avoid incurring penalties, you must stay on top of your lodgement and payment obligations. We’re here to support you in meeting these requirements. If you need assistance or are unsure as to whether you are currently up to date, please reach out to our office for assistance. Alternatively, you can review your current lodgements and account balances via your myGov Account or Online Services for Business.
Contact information:
Name: Future Advisory
Email: [email protected]
Phone: 1300 225 888
Google Maps: https://www.google.com/maps?cid=6437415810719387516
FAQs
What qualifies as a “reasonable excuse”?
- Serious illness or injury
- Natural disasters or system outages
- ATO portal failures
Can a tax agent submit a remission request for me?
Yes! Tax agents often improve your chances by framing your case effectively and attaching the right documentation.
Is there a deadline to submit a remission request?
There’s no strict deadline, but the sooner, the better, ideally before interest starts compounding.
What is an ATO penalty remission?
An ATO penalty remission is a formal request to reduce or cancel penalties for late lodgements or payments. Our accountants in Melbourne CBD can assist you with preparing and lodging these requests correctly.
Who can apply for an ATO remission?
Small businesses, sole traders, and entities with a good compliance history may be eligible. If you’ve received multiple warnings or have unresolved debts, your chances are lower. Contact our Accountants in Cremorne to assess your eligibility.
What types of penalties can be remitted?
Common penalties include late BAS lodgements, overdue PAYG payments, and incorrect tax deductions. A small business bookkeeping service can help prevent these by keeping you up to date year-round.
How do I request a penalty remission?
You can call the ATO or lodge a request online via your myGov or Business Portal account. Need help crafting your resignation letter? Our Xero accountants are experts at handling submissions with the right tone and supporting evidence.
What should I include in my ATO remission request?
Your request should outline the reason for the delay (e.g. illness, system failure), include supporting documentation, and a commitment to improved compliance. Our VCFO services can help you structure a strong case for remission.
How long does it take for the ATO to respond?
The ATO typically reviews remission requests within 28 to 56 days. You’ll be notified via mail or your ATO online account. Our Accountants in Narre Warren can follow up on your behalf and manage any appeals.
What happens if my ATO remission is denied?
You can object to the decision by lodging a formal objection. It’s best to seek support from a professional accountant. Our team offers full-service support, from objection letters to documentation preparation.
Can ATO penalties affect business funding or loans?
Yes, unresolved ATO debts or frequent penalties may impact your creditworthiness. Our mortgage broker can help structure your financials if you’re applying for a loan while resolving ATO issues.
How can I prevent ATO penalties in the future?
Stay compliant with timely lodgements, accurate reporting, and proper financial systems. Working with a dedicated financial planning team can help ensure you’re always ahead of tax deadlines.
