A Guide to Non-Lodgement Advice in Australia
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A Non-Lodgement Advice (NLA) is a formal declaration to the Australian Taxation Office (ATO) that you are not required to lodge an income tax return for a specific financial year. It is a fundamental compliance step that maintains the accuracy of your tax records and prevents the ATO from flagging your account for an overdue return. This guide provides a detailed overview of the process and requirements for the FY 2025–26 financial year.
From our experience at Baron Tax & Accounting, we observe that many individuals and new business owners in Brisbane are unaware of the need to formally notify the ATO when a tax return is not required. This common knowledge gap can lead to unnecessary "Failure to Lodge" notices and administrative burdens, a situation a Non-Lodgement Advice is designed to prevent.
What Is a Non-Lodgement Advice?
A Non-Lodgement Advice confirms that you have assessed your financial circumstances and determined your income is below the threshold requiring you to lodge a full tax return. It is not a method to avoid tax obligations but rather a tool for correctly meeting your legal compliance obligations when a return is not necessary. Submitting an NLA provides certainty for both you and the ATO that your tax affairs for the year are finalised.
Why Is an NLA Important?
Lodging this advice helps manage your relationship with the ATO in several key ways:
Prevents Unnecessary Notices: An NLA stops the ATO from issuing "Failure to Lodge" reminders or penalties for a return it was expecting.
Maintains Accurate Records: Your tax profile correctly reflects your circumstances for the year, which is important for future interactions with government agencies like Centrelink or Services Australia.
Supports Eligibility for Benefits: For some individuals, a complete lodgement history—which includes NLAs—is a prerequisite for accessing certain government payments and services.
Consider a practical example: a Brisbane-based sole trader who suspended their business for the entire financial year and earned no income. They would submit an NLA to inform the ATO that the absence of a tax return is intentional and correct. This action prevents potential compliance issues. The same principle applies to individuals whose income falls below the tax-free threshold. You can review more examples in our detailed information covering various individual tax situations.
Who Needs to Submit a Non-Lodgement Advice?
Determining whether to lodge a tax return or a Non-Lodgement Advice (NLA) depends on specific ATO criteria for different taxpayers. It is a common misconception that earning less than the tax-free threshold means you can simply do nothing. The ATO requires formal notification of why you haven't lodged, and an NLA is the correct procedure to maintain a clean tax record.
Individuals and Sole Traders
For most individuals, the tax-free threshold is the primary factor. However, other financial events can require a full return even with low income.
Generally, you can lodge an NLA if you meet these conditions:
Your taxable income was below the $18,200 tax-free threshold.
You had no tax withheld from any payments you received.
You are not carrying forward any tax losses from previous years.
Even with income below $18,200, you must lodge a tax return if you had tax withheld (and wish to have it refunded), need to claim franking credits, or received certain government payments.
Key Consideration: An NLA is a proactive confirmation to the ATO that you have reviewed your situation and a full return is not required. This prevents the ATO's automated systems from flagging you as a non-lodger.
Companies and Trusts
For business structures, the need to lodge is typically determined by activity, not a specific income amount.
A Non-Lodgement Advice is usually appropriate for:
Dormant Companies: A company that was registered but did not trade, earn income, or incur expenses during the financial year.
Trusts with No Net Income: A trust that was inactive and did not generate any income.
Ceased Sole Traders: An individual who has stopped all business activity and had no business income for the entire year. Managing your ABN status separately is also required. Our business tax directories provide more detail on requirements for different business types.
The decision-making process for a company can be simplified as follows:
Decision: Lodge Return or NLA for a Company?
+------------------------------------+
| Did the company exist during the |
| financial year? |
+------------------------------------+
|
▼
+------------------------------------+
| Did it conduct any business, |
| earn income, or have expenses? |
+------------------------------------+
| |
NO YES
| |
▼ ▼
+-------------------+ +------------------+
| Lodge a | | Lodge a Company |
| Non-Lodgement | | Tax Return |
| Advice (NLA) | | (Form C) |
+-------------------+ +------------------+Non-Residents
For non-residents, the rule is straightforward: if you earned no Australian-sourced income, an NLA is the correct way to confirm this with the ATO. A common example is a non-resident who previously earned rental income from an Australian property. If they sold that property and had no other income from Australia for the year, filing an NLA finalises their obligations for that financial year.
Practical Scenarios for Lodging an NLA
Understanding when to lodge a Non-Lodgement Advice (NLA) is clearer with practical examples. The decision hinges on your specific financial situation for the year. These scenarios cover individuals, non-residents, and business entities, illustrating how the rules apply in different contexts.
Common Scenarios for Individuals
For most people, income level and financial activity are the deciding factors. A student in Brisbane who worked casually and earned $15,000 for the year, with no tax withheld, is a classic example. Because their income is below the $18,200 tax-free threshold, they are not required to lodge a tax return. By submitting an NLA, they formally notify the ATO, preventing automated letters regarding a 'missing' return.
Retirees are another common group. An aged pensioner whose only income is from the government pension (with no tax withheld) is not required to lodge a return. Filing an NLA is a simple way to confirm this with the ATO and maintain a clean compliance record.
Scenarios for Non-Residents
For non-residents, the rules focus on Australian-sourced income. If a non-resident earned no income from Australia in a financial year, an NLA is appropriate. For instance, an Australian expatriate living overseas with a Higher Education Loan Program (HELP) debt, whose worldwide income falls below the repayment threshold, must submit an NLA. This informs the ATO they have assessed their global income and confirmed no repayment is due for that year.
Scenarios for Companies and Trusts
For business entities, the trigger for an NLA is usually a complete lack of activity. Understanding different business structures is key. A proprietary limited company registered in Brisbane late in the financial year that never commenced trading is considered dormant. The directors should lodge an NLA to confirm the company had no activity, a simpler process than filing a nil tax return.
Similarly, a family trust set up but never receiving assets or income would lodge an NLA. However, if a trust holds assets and generates income—even if it is fully distributed to beneficiaries—the trust itself must lodge a full trust tax return. An NLA is only for total inactivity.
When to Lodge an NLA vs. a Tax Return
This table breaks down common situations to clarify whether an NLA or a full tax return is the correct action.
Scenario | Requirement | Reasoning |
|---|---|---|
University student with $15,000 income, no tax withheld. | Lodge a Non-Lodgement Advice | Income is below the $18,200 tax-free threshold and no tax was paid, so no refund is due. The NLA closes the file for the year. |
Non-resident who earned $50 in bank interest from an Australian account. | Lodge a Tax Return | Any amount of Australian-sourced income for a non-resident generally requires a tax return, even if no tax is ultimately payable. |
A dormant company that was registered but did not trade or have any transactions. | Lodge a Non-Lodgement Advice | The company was inactive for the entire financial year. An NLA is the simplest way to meet its lodgement obligation. |
A family trust that earned income and distributed it all to adult beneficiaries. | Lodge a Trust Tax Return | The trust was active and had income. It must report the income and its distribution, even if the net income and tax liability are zero. |
As shown, the correct action depends on the specifics of your income and entity type. While an NLA is a simple tool, using it correctly is essential for compliance.
A Step-By-Step Guide to Lodging Your NLA
Submitting a Non-Lodgement Advice (NLA) is a straightforward process. The ATO provides several methods to ensure you can meet your obligations efficiently. Before proceeding, it is advisable to use the ATO's 'Do I need to lodge a tax return?' tool to confirm that an NLA is the correct action for your situation. Once confirmed, you can choose to lodge online, through a tax agent, or via a paper form.
Information You Will Need
To ensure a smooth process, have the following details ready:
Your Tax File Number (TFN)
Your full name, date of birth, and address (as recorded with the ATO)
The relevant financial year for the NLA
Method 1: Lodging Online via myGov
For most individuals, using a myGov account linked to the ATO is the most efficient option. It provides instant confirmation that your NLA has been received.
Sign in to your myGov account.
Navigate to the Australian Taxation Office linked service.
Go to Tax > Lodgements > Non-lodgement advice.
Select the correct financial year.
Answer the questions to confirm you do not need to lodge a full return.
Review the summary and declare the information is true and correct before submitting.
Method 2: Using a Registered Tax Agent
If your situation is complex or you prefer professional oversight, a registered tax agent can help. An agent can verify that an NLA is the appropriate action and lodge it on your behalf using their specialised software. This is particularly useful for dormant companies or inactive trusts. An agent can also identify if you might be due a refund, which can be estimated with a tax refund calculator.
Method 3: Lodging a Paper Form
You can still lodge an NLA by paper. Download the 'Non-lodgement advice' form from the ATO website or request a copy by mail. Complete the form, sign it, and post it to the address provided. This is the slowest method, as it relies on postal delivery and manual processing by the ATO, so allow ample time.
FAQs on Non-Lodgement Advice
Here are answers to some frequently asked questions about Non-Lodgement Advice.
Can I lodge one NLA for multiple years?
No. A separate Non-Lodgement Advice is required for each financial year. The ATO assesses your tax obligations on an annual basis, and your circumstances can change from one year to the next.
What if I lodged an NLA but later realised I should have lodged a tax return?
This can be corrected. If you discover you needed to lodge a tax return (for instance, to claim a refund or report previously forgotten income), you can simply prepare and lodge the correct tax return for that year. The lodged return will automatically supersede the NLA on the ATO's systems.
Does lodging an NLA affect my credit score?
No. Lodging a Non-Lodgement Advice is a routine compliance action and has no impact on your credit score. It is a formal communication with the ATO. However, failing to lodge either a required tax return or an NLA can lead to ATO penalties. If that debt remains unpaid, it could eventually impact your credit history.
Is there a deadline for submitting a Non-Lodgement Advice?
While there is no specific deadline for an NLA itself, the recommended practice is to submit it by the standard tax return due date, which for self-lodgers is 31 October. Lodging promptly prevents the ATO's automated system from issuing "Failure to Lodge" notices.
Summary
Key Requirement: Submit a Non-Lodgement Advice (NLA) if you are not required to lodge a tax return for a financial year. This applies to individuals, dormant companies, and inactive trusts.
Deadline: While not strict, it is best practice to lodge your NLA by 31 October to avoid automated ATO reminders.
Risk Areas: Doing nothing can lead to "Failure to Lodge" penalties and a default assessment from the ATO. A poor compliance history can affect loan applications and eligibility for government grants.
Brisbane Considerations: Whether you are a student, a retiree with minimal income, or a dormant business in Brisbane, lodging an NLA is a simple step to maintain a clean tax record.
Key Points to Review
This article provides general information about Non-Lodgement Advice. Your personal financial circumstances will determine your specific obligations. The rules and thresholds can change, so it is important to assess your situation each financial year.
For complex situations, such as those involving business structures, non-resident tax obligations, or uncertainty about your lodgement requirement, seeking professional advice is recommended. An incorrect lodgement can lead to complications, whereas a correctly filed NLA provides certainty and finality for the financial year.
Baron Tax & Accounting
Website: https://www.baronaccounting.com
Email: info@baronaccounting.com
Phone: +61 1300 087 213
Whatsapp: 0450 468 318
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