The penalty for lodging a tax return after the deadline in Australia is set to increase, if proposed legislation passes before the end of the financial year on July 1.

The 5.4 per cent increase will bring the existing $313 penalty up to $330, and the penalty will continue to go up every three years after that, in line with indexation.

Australians lodging their own tax returns for the 2023-2024 financial year will have until the October 31 deadline before a penalty is imposed.

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Those using a tax agent get a later deadline — taxpayers will simply need to have registered with the tax agent who will lodge their return for them before that same October deadline.

The ATO warns this penalty may be increased every 28 days after the deadline, up to a maximum of five times — that means, under the new penalty price, the fine could come to cost $1650.

That increases further for medium and large entities, with the ATO multiplying the fine by two and five respectively.

The expected $17 increase to the “Commonwealth penalty unit” was outlined in the Mid-Year Economic and Fiscal Outlook 2023–24 which was published in December last year.

It states that the change will commence “four weeks after passage of legislation”, and the review of the Crimes and Other Legislation Amendment (Omnibus No. 1) Bill 2024 is currently before the parliament.

The “penalty unit” is not just for late tax returns, it is also used by the Australian Taxation Office (ATO) to deter communication, financial, tax and fraud offences.

When the new increase comes into effect, the penalty will have increased by 83 per cent since 2017, according to DBA Lawyers.

The last increase, of 14 per cent, brought the penalty up to $313 from $275.

But even though the penalty is set to rise, it does not mean the ATO will impose it upon late taxpayers immediately after the tax return deadline.

The ATO will first warn you by phone or in writing that you have missed the deadline.

“We recognise that sometimes people don’t meet their lodgment obligations on time, even with the best intentions,” it previously told 7NEWS.com.au

“Generally, we don’t apply penalties in isolated cases of late lodgment. We consider your circumstances when deciding what action to take.”

And if you are expecting a tax bill this year, another date to remember is November 21 — this is when you need to pay your bill by if you lodged your return yourself to avoid interest being applied.