Filing for your income tax return can be a chore. It is such a chore that people forget or fail to lodge their income tax returns every year. For self-lodging individuals, it’s on the 31st of October. And for those with an accountant, it’s on the 15th of May. It’s pretty common for people to miss this schedule for many reasons, like being overseas, being too busy, or simply forgetting.
Whatever your reasons are for being delayed, it’s crucial that you settle any outstanding tax returns you might have as soon as possible. Not only you will get rid of this looming financial task that can be pretty annoying and anxiety-inducing, but you can also avoid incurring late or overdue penalties from the Australian Taxation Office (ATO).
However, if you have missed the time you were supposed to lodge your returns or have outstanding returns that you cannot or simply have not been able to take care of, here’s what you need to know:
What Should I Do When I Fail to Lodge on Time?
The first thing you need to do is contact the ATO and find out the details of your lodgement status. Once you know where you stand, you might have to pay the penalty. This may depend on your history and standing with the ATO. The standard penalty for late or outstanding returns is $222 every 28 days. However, by the five-month mark, you will be charged a maximum penalty of $1,110.
What Happens If I Continue to Miss Lodging My Returns?
If you continue to miss your lodgement, the ATO will either have to issue you with a default assessment warning letter or go right ahead with legal action. If you’re fortunate enough that legal action is not sought, the ATO can send assessment letters that will also include an estimate of your income for the missing year.
The downside to that is that agency won’t provide you with estimates that favour you. The ATO will not include most of the deductions you are entitled to simply because that responsibility lies with you. Letting the agency do your tax returns is likely to result in you paying a much higher figure than you should.
Is There a Way for My Penalty to Be Waived or Reduced?
There are some situations where the ATO might waive your existing penalties. However, the requirements are unlikely to apply to many of the people with penalties. Exemptions for missing the lodgment deadline only applies to particular cases where the cause is one of the following:
- Medical emergencies
- Not having access to crucial tax preparation documents
- Other compelling personal reasons (accidents, illnesses, and so on)
Another way to get your penalties waived or reduced is with the help of accounting professionals. They can help you figure out if you have any entitlements and make an appeal. But if you are a repeat offender, there is very little chance your penalties will go away.
The Bottom Line
Lodging late or outstanding tax returns is a pain. However, if you can take care of it as early as you can, you may be able to do it yourself. The ATO will show no favour or sympathy if you develop a pattern, but as a first-time offender, you might be granted leniency. There’s no guarantee it will happen, but if you’re patient, organised, and file the correct documents, you should be out of the woods soon enough.
Tax returns can be confusing and frustrating whether you’re new to it or not. It requires a lot of work and effort on your part. If you’re too daunted or just plain tired of the process, let us help you. New Wave Accounting has some of the best accountants on the Gold Coast. We provide the best solutions to all of our clients. Contact us today to get your taxes sorted!