Unless you are below the tax-free threshold or are in a tax-exempt category, lodging a tax return in Australia is compulsory; even if you have a loss or may not have any tax to pay.
Failure to do so can result in strict penalties, fines and interest too. Think you can get away with it? The Australian Taxation Office (ATO) has a very powerful data matching system. They will catch up with you, sooner or later.
Want to avoid getting caught by the taxmen? Here’s some tips on how to avoid penalties on late lodgement tax returns in Australia.
Most taxpayers, including individuals, must lodge their tax returns or inform ATO that their tax return lodgement is not required, by 31st October.
Tax agents and tax accountants are granted additional time for lodging tax returns. So if you’re lodging yours through a tax agent, you have until the 15th May of the following year (depending upon the type of return).
For most individuals and small businesses, the penalty for late submission of tax return varies from $180 to $900 per return. If your return is late by 113 days, you will be liable for the maximum penalty of $900. So, if you have five years of tax returns outstanding, you could be penalised by up to $4,500!
Run a company, partnership, trust or other business entity with a turnover of between 1 and 20 million? Your penalty will vary between $360 and $1,800 per return (depending on how late your payment is).
Say you have a turnover of $1.1 million and haven’t lodged any tax returns for five years? Well, you could be penalised a whopping $9,000 by ATO!
Even if no tax is due, a penalty for late lodgment still applies – Yep! This means you could end up paying more in fines and penalties to the ATO than in taxes.And why on earth would you want to do that?
In addition to penalties for the late filing of returns, the ATO will charge interest on any tax liability from the date the tax was due. And with the ATO’s benchmark interest rate for Sept-Dec 2018 quarter of 8.96% p.a., the interest is higher than you’d pay on your mortgage.
If you’re late in lodging your tax return, it’s best not to try and sort it out yourself. While you can lodge your own returns online using MyGov portal, there would be many issues to be considered beforehand. So, don’t do it yourself! Consult a tax accountant who is experienced in late lodgement issues instead.
An accountant experienced in late lodgements will also be able to review your personal circumstances to determine if there are grounds for penalties and interest to be waived or reduced.
Payment arrangements can also be negotiated with ATO for the tax liability to help your cashflow. So, it really is worth seeking professional advice.
At Tax Store in Osborne Park, Perth, we offer the professional tax advice you seek and can help by offering you a free 1-hour consultation today!