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Penalties look set to apply to the 5% of businesses and individuals who have overdue Business Activity Statements (BAS), the latest news from the Australian Taxation Office (ATO) reveals. Letters to taxpayers warn businesses that penalties (of $110 per 28 days late for low turnover businesses up to $550 for high turnover businesses) will apply from July 1. While the ATO has adopted a lenient approach in the first two years of the new system, Tax Commissioner Michael Carmody confirms lodgment penalties will apply more broadly from the first BAS in the 2002/03 year. "With the second anniversary of the new tax system on 1 July 2002, we are moving to a new bedding-in phase which is designed to ensure the integrity promised with the system is delivered for the community," Carmody says. "However, reflecting the new approaches of the Tax Office, penalties will not be applied for on-off or isolated late lodgments. "I recognise that even with the best intentions, events will arise that mean people will not always get it right. People genuinely doing the right thing will not be penalised for isolated slip ups." Small businesses that continually lodge their BAS late are urged to seek advice from their accountant, tax agent, financial advisor or the ATO. "We want to give people every encouragement over the coming months to get help from the Tax Office to get into a regular lodgment pattern as we do not want to see anyone penalised.