I haven't lodged for a few years — can the ATO actually take me to court?

There is a stack of ATO letters somewhere in the house that stopped being opened about two years ago. The first year was going to get sorted in January, then the second year happened, and now the thought of starting is worse than the thing itself. Then a headline goes past saying prosecutions are up 80%, and a question that felt administrative stops feeling administrative.

The honest answer is that the ATO can prosecute for not lodging, that it does, and that it did so considerably more often last financial year than the year before. The less alarming part is that the path to a courtroom is long, signposted, and — on the ATO's own description of it — almost always travelled by people who stopped responding.

What the ATO announced on 17 September

In a media release titled 'Out of the shadows', published 17 September 2026, the ATO said successful prosecutions for non-lodgment increased by more than 80% between 2024–25 and 2025–26. Over the past two years it has successfully prosecuted more than 350 individuals and entities, secured convictions of more than 305 of them — an increase of almost 60% between those two years — and taken action leading to more than $2.7 million in fines imposed by the courts.

The state split for 2025–26 is not what most people would guess. Queensland accounted for 28% of successful non-lodgment prosecutions, Western Australia 26%, New South Wales 20%, Victoria 17%, South Australia 7%, the Northern Territory 2% and the ACT 1%. Three states make up almost 75% of the national total, and the largest share is not the largest state.

The framing in the release is worth reading as written. ATO Assistant Commissioner Tony Goding said a criminal conviction can have significant impact on reputation, business viability and the ability to travel overseas, as well as making it harder to borrow money or obtain insurance. The release also states plainly that lodging tax returns is a legal obligation, not a choice. Its subject is shadow economy activity — deliberate non-lodgment, cash-in-hand work, hidden business activity — rather than a return that is three months late.

The ladder, one rung at a time

The first rung is money. The failure to lodge on time penalty is one penalty unit for every 28 days, or part of 28 days, that a document is overdue, up to a maximum of five penalty units. A penalty unit is $364 where the infringement occurs on or after 1 July 2026, which puts the ceiling for an individual at $1,820 per document. The ATO's own instruction is that if you can't lodge by the due date you should contact it as soon as possible, so the risk of a penalty can be reduced.

The second rung is a final notice. Where earlier requests have been ignored, the ATO can issue one — a legal document requiring lodgment by a particular date. Failure to comply with it can lead to prosecution action.

The third rung is the ATO doing the return for you. It can issue a default assessment, assessing income without your help, and the ATO notes such an assessment may be less accurate than one you prepared yourself. A default assessment attracts a penalty of 75% of the tax-related liability — for every $100 owed, an additional $75 is payable. The ATO says it provides the details and ample opportunity to supply the missing information before issuing one. It can also select the account for audit and request bank statements or business records for the unlodged periods, and in exceptional high-risk cases, such as suspected illegal phoenix activity, retain a refund until lodgment is made.

The last rung is court. Failing to lodge is a criminal offence, and once convicted you could face additional fines and/or imprisonment for up to 12 months. The ATO's stated practice is to notify its intentions first, usually by phone and in writing, and allow sufficient time to bring overdue lodgments up to date. What triggers the climb, in the ATO's words, is being unwilling to work with it, not meeting agreements to lodge, or having no capacity to lodge and taking no steps to resolve it.

Two things people get wrong

The first is the belief that a nil or refund year cannot be a problem. The obligation to lodge is separate from the balance of the account. The ATO does say it generally will not issue a failure to lodge penalty notice where a late-lodged return results in a refund or a nil result, with exceptions — including where the penalty was applied before the return was lodged. That is a real concession, but it is one you learn you qualified for after the return is prepared, which is the step being avoided. It also says nothing about the prosecution path, which is about the failure to lodge itself rather than the amount.

The second is the belief that this is only for serious fraud. The 17 September release is about non-lodgment specifically. And a conviction does not close the file: the returns still have to be lodged afterwards, alongside whatever the court imposed.

Why the next six weeks matter more than usual

If you lodge your own return, the due date is 31 October. Because 31 October 2026 falls on a Saturday, self-lodgers reach the next business day — Monday 2 November 2026.

For anyone carrying an unlodged earlier year, two things cut against that comfort. First, if any prior year return was outstanding as at 30 June 2026, the 2026 return is due 31 October regardless of whether an agent is involved. Second, the ATO told registered agents that although 31 October falls on a weekend in 2026, overdue prior year returns must be lodged and new clients added to their client list by that date — not the next business day — and that clients missed by the cut-off will not receive lodgment program due dates for their 2026 return. It can also take up to three weeks for those due dates to update once prior year returns are lodged.

In plain terms: for people who are up to date, the deadline moved by two days. For people who are behind, 31 October is a harder date than usual, and being added to an agent's list in the last week of October is not the same as having the work done.

This is general information current as at 18 September 2026, not advice about any particular situation, and nothing here predicts what the ATO will do in an individual case. The useful next step is unglamorous: work out exactly how many years are outstanding, rather than estimating. Everything in the ATO's escalation sequence is triggered by silence, and everything in its published guidance points the other way — contact made before a final notice is a different conversation from contact made after one. Our income tax calculator will give a rough sense of where a year lands before the paperwork starts, and bringing several overdue years back into order is ordinary work for our individual tax return service.