Late BAS Lodgement Penalties 2026-27: Cost and Remission

The most expensive part of a late BAS is rarely the penalty. It is the interest, and since 1 July 2025 you can no longer claim a deduction for it.

That change quietly made every overdue activity statement about a third more expensive in after tax terms. Add a penalty unit that rose again on 1 July 2026, and the arithmetic on "we will catch up next quarter" has shifted. This guide sets out what a late BAS actually costs in the 2026-27 financial year, when it stops being a company problem and becomes a director's personal debt, and what the Australian Taxation Office will and will not forgive.

How Much Is the Penalty for Lodging a BAS Late?

The penalty sits in section 286-75 of Schedule 1 to the Taxation Administration Act 1953. The unit value is set by regulation and is indexed every three years. It moved from $330 to $364 under the Crimes (Amount of a Penalty Unit) Instrument 2026, effective 1 July 2026. Plenty of commentary online still quotes $330, or even $313. Check the date attached to any figure you read, including ours.

Entity size is not decided by turnover alone. The multiplier turns on withholder status as well as assessable income or current GST turnover. A business withholding between $25,000 and $1 million a year is a medium withholder and attracts the doubled rate even if its revenue sits at the lower end of the $1 million to $20 million band. The 500 unit rate for significant global entities is set out in the ATO's significant global entity penalty guidance.

Two points are widely misunderstood. First, the ATO states on its failure to lodge on time penalty page that it will warn you by phone or in writing before applying a penalty and issuing a notice to lodge. The penalty is not automatic. Second, it will generally not apply the penalty where the lodgement produces a refund or a nil result, subject to exceptions for large withholders, third party data reports, and penalties already raised. A nil BAS lodged late is a compliance problem, not usually a financial one.

The penalty unit has more than tripled since 2012, which is why old blog posts and old advice are so unreliable on this point.

Source: ATO, Penalty units, updated 26 June 2026.

If several statements are outstanding, the penalty applies to each one separately. Three overdue quarters for a small entity is $5,460 before a dollar of interest. Our BAS and IAS lodgement service exists largely to stop that arithmetic starting.

How Much Interest Does the ATO Charge on an Overdue BAS?

Lodgement and payment are separate obligations, and they attract different consequences. Failure to lodge penalty attaches to late lodgement. General interest charge attaches to late payment. Lodge on time and pay late, and you get interest but no penalty. Lodge a refund BAS late, and you usually get neither.

Because the charge compounds daily, the cost is not linear. The ATO publishes the GIC rate for each quarter roughly two weeks before it starts, so a debt carried across a rate rise accrues at the new rate from the first day of the new quarter.

Illustrative only. Calculated at the October to December 2026 daily rate of 0.03153425% held constant. Actual GIC reflects the rate in force for each quarter the debt is outstanding.

Is the General Interest Charge Still Tax Deductible?

The change came through the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 and is explained in the ATO's guidance on denying deductions for ATO interest charges. The practical effect is easy to underestimate. Interest that used to be a deductible cost of finance is now paid from after tax dollars.

For a base rate company paying tax at 25%, every $1,000 of general interest charge now costs the same as $1,333 of a deductible expense. For a sole trader on the top marginal rate including Medicare levy, $1,000 of interest bites like $1,887. The ATO has become one of the most expensive lenders a business can use, and it is no longer a tax effective one.

Worked example: a Melbourne trades business, one quarter behind

A small building company reports a net GST liability of $48,000 on its September quarter BAS. Cash is tight after a slow retention release, so the statement is lodged and paid 100 days after the due date. The company is a base rate entity.

• Failure to lodge penalty: 100 days spans four 28 day periods, counting part periods. Four units at $364 is $1,456.
• General interest charge: $48,000 compounding at 0.03153425% a day for 100 days is approximately $1,538.
• Total cost: approximately $2,994 on top of the GST itself.
• After tax: none of the $1,538 of interest is deductible, so funding it takes roughly $2,050 of pre tax profit at the 25% rate.

Had the same company lodged on time and simply paid late, the penalty would have been nil and the cost roughly half. Lodging is free. Paying is what costs money. That distinction is the single most useful thing a business under cash flow pressure can understand, and it is why we build BAS obligations into a client's three way cash flow forecast rather than treating them as a quarterly surprise.

When Does a Late BAS Become a Director's Personal Debt?

This is the rule that turns an administrative problem into a personal one. Under Division 269 of Schedule 1 to the Taxation Administration Act 1953, directors are personally liable for the company's unpaid GST, PAYG withholding and superannuation guarantee charge. The ATO must issue a director penalty notice before it can recover, and the director has 21 days from the date of the notice to act.

What those 21 days are worth depends entirely on whether the BAS was lodged. The ATO's director penalty guidance is explicit that amounts estimated by the Commissioner are treated as never reported, so they fall into the stricter category regardless of timing.

Our view is simple. If a company cannot pay its GST, lodge the BAS anyway, and lodge it inside three months. Lodging costs nothing and preserves every option a director has. Not lodging removes them permanently, and a small failure to lodge penalty is trivial next to personal liability for the whole debt.

Can You Lose GST Credits by Lodging Your BAS Too Late?

The ATO sets this out in its guidance on time limits on GST credits, supported by ruling MT 2024/1. The same four year framework applies to fuel tax credits.

This is the quiet cost of a long backlog. A business four years behind is not merely facing penalties and interest. It may be handing back real money it was entitled to, and no remission application recovers it. Where we take on a client with several years of unlodged statements, the first thing we check is which periods are close to expiry. That work sits inside our tax compliance service, and it is usually urgent.

Will an Overdue BAS Debt Show Up on Your Credit File?

For a business that borrows, this is often the consequence that matters most. A disclosed tax debt sits on the commercial credit file and is visible to lenders, suppliers and trade insurers. The ATO's criteria are published in full under disclosure of business tax debts.

Note the wording of the escape hatch. It is engagement, not hardship. General cash flow difficulty does not stop disclosure. A payment plan that is actually being met does. If a debt is heading towards the $100,000 mark, arranging the plan before day 90 is the whole ballgame.

Beyond disclosure, the ATO's escalation path runs through reminder letters and notices to lodge, default assessments where statements remain outstanding, garnishee notices served on bank accounts or debtors, director penalty notices, and prosecution in the most serious cases. Most of it is avoidable by lodging and talking early, which is a large part of what our small business accounting team does for clients under pressure.

Can a Late BAS Penalty or Interest Charge Be Remitted?

The Commissioner's approach to failure to lodge penalties is set out in practice statement PS LA 2011/2, and to general interest charge in PS LA 2011/12. Both survived the process changes introduced this year.

Those changes followed the Tax Ombudsman's review of how the ATO manages interest remission. In its response published on 2 March 2026, the ATO agreed with all ten recommendations and confirmed new application forms, a specialist review team for requests above $2,500, and expanded published examples of when remission is and is not likely. Requests at or under $2,500 can still be dealt with by phone. Registered agents lodge through Online Services for Agents, and an application can be resubmitted where information was left out the first time.

Four grounds carry the most weight in practice:

• Circumstances genuinely beyond your control: natural disaster, serious illness, death of a key person, a documented system failure.
• ATO delay or error: incorrect advice, processing delays, or a portal outage at the deadline.
• A good compliance history: a first lapse after years of on time lodgement is treated very differently from a pattern.
• A disproportionate outcome: where the penalty is out of step with the seriousness of the default.

In our experience acting for a Melbourne property holding group, the difference between a rejected request and a partial remission of the interest component came down to evidence, not argument. A dated chronology, medical documentation, bank statements showing the cash position at each due date, and a lodged plan to bring everything current. Requests that assert hardship without documenting it are routinely refused. We would not promise an outcome on any remission application, and neither should anyone else.

What Lodgement Extensions Are Available, and Who Gets Them?

The self lodger concession is set out in the ATO's two week lodgment concession terms. It is automatic, requires no application, and is lost if you lodge on paper. It does not apply to monthly statements, monthly GST payers, or larger clients with substituted accounting periods.

The agent concession is a feature of the registered agent lodgment program, not an automatic right. It is conditional, and it does not apply where the statement includes monthly PAYG instalments, a consolidated head entity, a monthly GST cycle, or forms R, S or T.

The ATO marks the Q4 agent date as to be confirmed when the Lodgment program 2027-28 is developed. Full dates for every obligation are in our key ATO due dates guide for 2026-27.

Late BAS Risk Looks Different in Every Industry

The penalty rules are uniform. The exposure is not. Four sectors we work with closely show how differently the same 100 day delay lands.

Startups

Pre revenue startups usually lodge refund BAS, so failure to lodge penalties are rarely the issue. The damage is to runway. A refund sitting unclaimed is working capital the business already owns, and a late statement delays it by weeks. The four year credit limit also bites hardest here, because setup costs, professional fees and equipment sit in the earliest periods, which are the first to expire. We cover the structural side in our startup accounting and advisory service, and the equity side in our guide to employee share scheme tax for startups.

SaaS and technology

Annual prepayments, mid term plan changes and overseas payment platforms make GST attribution genuinely difficult for subscription businesses. The risk is not usually a missed deadline but a wrong figure discovered later, which brings shortfall interest charge into play alongside general interest charge, and that interest is equally non deductible. Getting the timing right in the first place is the point of our tech and SaaS accounting service and our note on revenue recognition rules for SaaS.

E-commerce and online retail

Online retailers carry the largest GST balances relative to profit of any sector we act for, because marketplace collected GST, low value imported goods and deferred GST on imports all land in the same statement. A 100 day delay on a $48,000 liability is painful. On the $150,000 balances that a mid sized store can report in a peak quarter, it is a genuine solvency question. Our e-commerce accounting service and our list of e-commerce accounting mistakes cover the recurring traps.

Doctors, dentists and health practices

Medical and dental groups commonly run a practice entity, a service entity and one or more trusts, each with its own ABN and its own BAS. Penalties accrue per entity, so a single overlooked service entity can generate its own $1,820 while the main practice is perfectly compliant. Mixed GST-free and taxable supplies add a second layer of difficulty. We set this out in our accounting service for doctors and dentists and in our guide to service trust structures for medical practices.

What to Do If You Are Already Behind on BAS

Work through these in order. The sequence matters more than the speed.

• 1. Lodge, even if you cannot pay. Lodging stops the penalty clock, preserves director options inside the three month window, and protects GST credits.
• 2. Identify the oldest period first. Anything approaching four years from its original due date is at risk of losing credits permanently.
• 3. Get the bookkeeping straight before lodging. A rushed statement that later needs amending adds shortfall interest to the bill.
• 4. Arrange a payment plan before day 90. Engagement is what prevents credit reporting once a debt passes $100,000.
• 5. Apply for remission with evidence, not assertions. Chronology, documents, and a credible plan to stay current.
• 6. Fix the cause. Most chronic late lodgement is a bookkeeping capacity problem, not a wilful one.

On that last point, the pattern is consistent. Businesses that fall behind almost always have a records problem first and a tax problem second. Reliable monthly bookkeeping removes the quarterly scramble entirely, and our bookkeeping guide for Melbourne owners sets out what good looks like. If you are new to activity statements altogether, start with our BAS and tax guide for small businesses.

Summary: What a Late BAS Costs in 2026-27

If you take one thing from this: lodge the statement even when you cannot pay it. It is free, it caps the penalty, it protects your credits, and for a director it preserves every option that matters. Everything else can be negotiated. Advice on the rest sits with our CPA accountants in Melbourne.

Frequently Asked Questions