Penalty for Failure to Lodge Activity Statement on Time (2026 Guide)

Late Tax Lodgement Penalties for Production Companies and Freelancers

Missing a tax lodgement deadline is stressful for any business owner. But for production companies and freelancers in the screen industry, the risk is higher than most realise. Production schedules do not align neatly with the ATO’s quarterly BAS cycle. A major shoot can consume every hour of your attention for months, and tax compliance can slip to the bottom of the priority list.

Here is a comprehensive guide to what happens when you miss a lodgement deadline, what it costs, and how to get back on track – with specific advice for production companies and creative freelancers.

The ATO Penalty Regime Explained

The Australian Taxation Office imposes Failure to Lodge (FTL) penalties when taxpayers do not meet lodgement obligations on time. Understanding how these penalties are calculated helps you appreciate why timely lodgement matters.

How FTL Penalties Are Calculated

FTL penalties are based on “penalty units.” As of 2025-26, one penalty unit equals $330. The penalty accumulates for each 28-day period (or part thereof) that the lodgement remains overdue:

• Small entities (turnover under $1 million): 1 penalty unit per 28-day period, up to a maximum of 5 penalty units. That means a maximum penalty of $1,650.
• Medium entities (turnover $1 million to $20 million): The base penalty is multiplied by 2, giving a maximum of $3,300.
• Large entities (turnover $20 million or more): The base penalty is multiplied by 5, giving a maximum of $8,250.
• Significant global entities: The base penalty is multiplied by 500 – penalties that can reach $825,000.

For production companies, entity size classification matters. A production SPV that processes $15 million in qualified Australian production expenditure in a single financial year may be classified as a medium entity, even if the parent company is small. This means FTL penalties for a late production company tax return could be double the standard rate.

General Interest Charge (GIC)

In addition to FTL penalties, the ATO charges General Interest Charge (GIC) on any outstanding tax debt. The GIC rate is set quarterly and is based on the 90-day Bank Accepted Bill rate plus 7%. As of the current quarter, this typically sits around 11-12% per annum. GIC compounds daily, so the longer you leave an outstanding debt, the faster it grows. For a production company with a $200,000 tax liability, even a three-month delay in lodgement and payment could add $5,000-$6,000 in interest charges alone.

What Lodgements Attract FTL Penalties

The ATO’s automated penalty system applies to late lodgement of:

• Income tax returns
• Activity statements (BAS and IAS)
• Fringe Benefits Tax (FBT) returns
• PAYG withholding annual reports
• Single Touch Payroll (STP) finalisation declarations
• Annual GST returns and information reports
• Taxable payment annual reports (TPAR)

For production companies managing crew payments, the STP and PAYG obligations are particularly important. Late STP finalisation – which must be completed by 14 July each year – can trigger penalties even if your income tax return is lodged on time.

Special Considerations for Production Companies

Production companies face unique timing challenges that most businesses do not encounter. Understanding these can help you plan ahead and avoid unnecessary penalties.

Financial Year Timing Around Wrap

Many productions wrap in the second half of the financial year (January to June), which means the heaviest period of financial activity coincides with year-end compliance deadlines. If your production wraps in May or June, your accounts team is simultaneously closing out the production budget, processing final crew payments, reconciling production bank accounts, and preparing for year-end tax lodgements. This compression creates a high-risk window for missed deadlines.

The solution is to plan your compliance calendar at the start of each production. Map out BAS due dates, STP deadlines, and tax return due dates against your production schedule. If a clash is inevitable, engage your accountant early to apply for extensions or arrange interim lodgements.

BAS Lodgement Deadlines That Catch Production Companies Out

Quarterly BAS lodgements are due on the 28th day after the end of each quarter (or the 28th of the following month for monthly lodgers). For production companies, the most dangerous quarter is Q4 (April to June), due on 28 July. This deadline falls right when many productions are wrapping, when final invoices are still being processed, and when crew timesheets are still being reconciled.

The December quarter BAS (due 28 February) is another trap. Many production companies have skeleton staff over the Christmas-January period, and the February deadline can arrive before the team is fully back and across the numbers.

If you lodge through a registered BAS agent or tax agent, you may be eligible for extended due dates. Count Out Loud manages BAS lodgement for production companies and can take advantage of the agent lodgement program to give you additional time where available.

Crew Payroll and STP Complications

Production crews are a mix of employees, daily hires, and contractors. Each category has different reporting obligations. STP reports must be lodged with each pay run, and the annual STP finalisation declaration is due by 14 July. Late STP reporting can trigger ATO compliance action, and for production companies with large crews, the volume of data involved makes errors more likely.

When the ATO Shows Leniency for Production Schedules

The ATO does recognise that certain industries face unusual timing pressures. While there is no formal “production company exemption” from lodgement deadlines, the ATO does exercise discretion in several ways.

Isolated Late Lodgement

If your lodgement history is otherwise clean, the ATO will often not impose a penalty for a single late lodgement. This applies particularly where the late return results in a refund or nil liability. However, this leniency does not extend to large entities, third-party data reports (like TPAR), or situations where a penalty was already issued before the late lodgement was received.

Natural Disaster and Extraordinary Circumstances

The ATO has formal provisions for remitting penalties when taxpayers are affected by natural disasters, serious illness, or other extraordinary circumstances. While a busy production schedule alone does not qualify, situations such as a production being shut down by severe weather, a key financial staff member falling seriously ill during production, or a major data loss affecting your accounting records could all form the basis of a remission request.

Tax Agent Extensions

Registered tax agents have access to a lodgement program that provides extended due dates for their clients’ tax returns. If you are lodging through a tax agent like Count Out Loud, your income tax return due date may be extended to as late as 15 May of the following year (depending on your lodgement history and prior year status). This can provide crucial breathing room for production companies whose financial year is complicated by ongoing productions.

Voluntary Disclosure and Penalty Remission

If you have already missed a deadline, taking proactive steps can significantly reduce the financial impact.

Lodge Before the ATO Contacts You

If you lodge a late return before the ATO issues a penalty notice, you are in a much stronger position. The ATO’s automated systems typically allow a grace period before penalties are issued, and voluntary lodgement demonstrates good faith. Lodge the return first, then deal with any resulting tax debt separately.

Requesting Penalty Remission

You can request remission (reduction or cancellation) of an FTL penalty if mitigating circumstances prevented you from lodging on time. The ATO updated its remission process in January 2026, requiring formal applications for all requests.

How to Apply for FTL Penalty Remission

1. Lodge the overdue document first — the ATO will not consider remission until the outstanding lodgement has been submitted
2. Gather supporting evidence — medical certificates, financial statements, disaster documentation, or letters from professionals
3. Submit your application via:
   • Online services — Secure Mail for businesses, Practice Mail for tax agents
   • Phone — for penalty amounts under ,000
   • Mail — PO Box 327, Albury NSW 2640 (for amounts ,000+)

Requests over ,500 are escalated to a dedicated team and may take longer to process.

Grounds for Penalty Remission

The ATO will consider remission where the late lodgement was caused by circumstances genuinely beyond your control:

• Severe or extended illness — requiring medical treatment that prevented you from attending to tax obligations
• Natural disaster — bushfires, floods, or other emergencies affecting you, your business, or your records
• Death or serious illness of a family member, key business person, or your tax agent
• Domestic violence or family crisis
• System outages — ATO or accounting software failures that prevented electronic lodgement
• Incorrect professional advice — where you relied on written advice from a registered agent that turned out to be wrong
• Isolated occurrence — your compliance history is otherwise clean and the late lodgement was a one-off

The ATO is unlikely to grant remission if you were simply busy, forgot the deadline, did not receive reminder notices, or had a minor short-term illness. Financial difficulty alone (being unable to pay the tax) is also not grounds for remission of the FTL penalty itself, though you can arrange a payment plan for the underlying debt.

An officer independent of the original penalty decision reviews all remission requests. You can request full or partial remission.

Safe Harbour Provisions

If you engaged a registered tax agent or BAS agent and provided them with all relevant information by the due date, you may qualify for the “safe harbour” exemption from FTL penalties. This means the penalty falls on the agent rather than the taxpayer, provided the agent’s failure to lodge was not due to the taxpayer withholding information. For production companies, this underscores the importance of getting your financial records to your accountant well before deadlines – not in the final week.

Lodging Late Tax Returns and Overdue BAS

If you have missed the deadline for a tax return, BAS, or other lodgement, you can still lodge it. The ATO accepts late lodgements at any time, and in most cases lodging late is far better than not lodging at all. Here is what you need to know about lodging overdue returns:

• You can lodge at any time — there is no cut-off. The ATO accepts returns that are months or even years overdue
• Lodge before the ATO contacts you — voluntary lodgement before receiving an ATO notice can reduce or eliminate penalties
• Use a registered tax agent — agents have access to extended lodgement programs and can negotiate with the ATO on your behalf
• Penalties stop accruing once you lodge — the sooner you lodge, the lower the total penalty
• A late return can still result in a refund — if the ATO owes you money, no FTL penalty applies to a nil or credit assessment

For production companies with multiple overdue lodgements, prioritise BAS first (these attract penalties fastest), then income tax returns, then STP finalisation.

How to Get Back on Track

If your production company or freelance business has fallen behind on lodgements, the worst thing you can do is ignore it. The penalties compound, GIC interest accrues daily, and the ATO’s automated systems will eventually escalate the matter.

Count Out Loud’s Compliance Catch-Up Process

We regularly help production companies and creative freelancers who have fallen behind on their tax obligations. Our catch-up process involves:

1. Assessment: We review all outstanding lodgement obligations – BAS, income tax, STP, PAYG, and FBT – to establish exactly where you stand.
2. Prioritisation: We prioritise lodgements based on penalty exposure and ATO escalation risk, addressing the highest-risk items first.
3. Reconstruction: For clients who have incomplete records, we can reconstruct financial data from bank feeds, Xero backups, production budgets, and third-party sources.
4. Lodgement: We lodge all outstanding returns and statements, taking advantage of agent concessions where available.
5. Negotiation: Where penalties have been imposed, we prepare and submit remission requests on your behalf, presenting your circumstances in the strongest possible light.
6. Prevention: We set up systems – including Xero-based workflows and automated reminders – to ensure you never fall behind again.

Payment Plans for Outstanding Tax Debt

If late lodgement has resulted in a tax debt you cannot pay immediately, the ATO offers payment plan arrangements. These allow you to pay the debt in instalments over an agreed period. GIC still accrues on the outstanding balance, but having a formal payment plan in place prevents the ATO from taking further enforcement action. Count Out Loud can negotiate payment plans on your behalf and structure them around your production income cycle.

BAS Due Dates for 2025-26

Staying on top of BAS deadlines is the simplest way to avoid FTL penalties. Here are the key dates for the 2025-26 financial year:

Quarter	Period	Due Date (Self-Lodgement)	Agent Extended Date
Q1	July-September 2025	28 October 2025	25 November 2025
Q2	October-December 2025	28 February 2026	28 March 2026
Q3	January-March 2026	28 April 2026	26 May 2026
Q4	April-June 2026	28 July 2026	25 August 2026

If you lodge through a registered BAS agent like Count Out Loud, you automatically receive the extended due dates shown above, plus safe harbour protection from FTL penalties.

Do Not Wait Until It Becomes a Bigger Problem

Whether you are a freelance cinematographer who has missed one BAS, or a production company with two years of outstanding returns, the path forward starts with a single conversation. The ATO is generally more accommodating when taxpayers come forward voluntarily than when they have to chase you.

Behind on your lodgements? Contact Count Out Loud today for a confidential discussion about getting back on track. Call (02) 9043 1525 or visit us at 1 James Place, North Sydney. We specialise in the screen and creative industries and understand the unique pressures that production schedules place on compliance deadlines.

Disclaimer: This content is general information only and does not constitute tax, financial, or legal advice. It does not take into account your individual circumstances. You should seek professional advice from a qualified accountant or tax agent before acting on any information contained here. Tax laws change frequently — information on this page was current at the time of publication but may not reflect the latest legislation. Contact Count Out Loud for advice specific to your situation.