What actually happens when you lodge BAS late
Most people know they’re supposed to lodge their BAS on time. Far fewer know what the ATO actually does when they don’t.
The short answer is: it depends on how late, how often, and whether you wait for them to chase you or get ahead of it yourself. The ATO’s approach has changed over the past few years, and the tolerance many small business owners assumed they had is largely gone.
The penalty kicks in faster than you think
A Failure to Lodge (FTL) penalty applies automatically once your BAS is overdue. The ATO calculates it in penalty units — currently $330 per unit — and the number of units stacks up based on how overdue the lodgement is. For a small business entity, you’re looking at one penalty unit for every 28 days it’s late, capped at five units. That’s $1,650 before you’ve even looked at what you owe.
If you’re a medium or large withholder, the multiplier is higher. The penalty can get uncomfortable quickly.
The debt plus interest problem
The FTL penalty is separate from the actual GST and PAYG you owe. Once a liability is overdue, the ATO charges the General Interest Charge (GIC) on top of the unpaid amount. The GIC rate is updated quarterly — it’s been sitting above 11% annually in recent periods. So the longer you leave it, the more the debt compounds.
What a lot of people don’t realise is that the ATO can also issue a default assessment if you don’t lodge at all. They estimate what you owe based on prior periods or industry data, and that figure is rarely conservative.
What happens if you ignore it
The ATO has been more aggressive about debt collection since the COVID deferral period wound down. Ignoring an overdue BAS now can escalate to director penalty notices (for companies), garnishee orders on bank accounts, or credit reporting of tax debts over $100,000. None of those outcomes are quick to undo.
That said, the ATO does respond well to proactive contact. Calling them before the due date — even if you can’t pay — usually results in a payment plan with reduced or remitted penalties. Waiting for them to come to you rarely ends as well.
The practical takeaway
If you’ve missed a BAS, lodge it now. Even if you can’t pay the full amount, lodging stops the FTL penalty from growing. Then call the ATO or speak to your tax agent about a payment arrangement.
If you’re consistently finding BAS stressful — because the cash isn’t there, the records aren’t clean, or you’re just not sure what’s due — that’s worth fixing at a systems level rather than managing crisis to crisis each quarter.
If you’d like to talk through your situation, reach out to JVM Accountants.
