ATO 'final notice' to lodge your tax return: what happens next

A final notice follows earlier reminders about the same outstanding lodgement. By the time it is issued, the ATO has usually already prompted you more than once, whether or not those earlier letters reached you.

The notice warns that if you do not lodge, the ATO may apply a failure to lodge penalty, or it may issue a default assessment. A default assessment is the ATO assessing you on the information it holds instead of waiting for your return.

Our guide on what an ATO notice to lodge means covers the earlier notices in the same series.

Because a return the ATO expects is still outstanding after earlier contact. The trigger is the open year, not anything you have done wrong in responding.

Many people receiving a final notice have never seen the earlier ones. Letters go to an old address, myGov messages go unread, or the reminders arrived during a period when tax was not the most pressing thing happening. None of that changes the position, and none of it counts against you when you come forward.

It is also common to receive a final notice for one year while several others are open. The ATO works account by account, so a notice about a single year does not mean the rest are resolved.

Two things become likely. The ATO can apply a failure to lodge penalty for the outstanding return, and it can issue a default assessment.

A default assessment is the part worth avoiding. Because it is built from the information the ATO holds, it does not include your deductions, so the tax figure it produces usually overstates what you actually owe, and a penalty is added on top. Replacing it afterwards is possible but it is more work than lodging would have been, and the review windows for challenging it are limited. See what to do about an ATO default assessment.

There is also a compounding effect: a debt raised on an overstated default assessment starts accruing the general interest charge on a figure that was never correct.

Lodge first, and lodge before those steps are taken. Lodging before the ATO applies a penalty or issues a default assessment is the cleanest outcome available to you. It puts your own numbers, with your deductions, in front of the ATO rather than the ATO's estimate.

Then deal with penalties and debt. If a penalty has already been applied, remission can be requested, and the ATO can remit in full or part where there is a reasonable explanation. Any resulting debt can then be put onto a payment plan.

You do not need to have your records together to start. The ATO pre-fill for the year gives us the reported income, and we work from there. A free assessment tells you which years are open and what clearing them costs, on a fixed fee, before you commit to anything.