At Wilson Pateras, we understand that Australians lead busy lives. Even with the very best intentions, business owners and individuals can become caught up in their daily responsibilities and fail to meet their tax lodgment obligations on time. Thankfully, the ATO (Australian Tax Office) recognises this too and generally doesn’t apply penalties in isolated cases of late lodgment. But what happens if your lodgment does tick over into overdue?
In today’s blog we’re in conversation with Wilson Pateras Accountant, Bryan Tan. Read on as Bryan unpacks the potential outcome of failing to submit your tax return in the allocated timeframe.
What are some direct actions the ATO might take?
In most cases of late lodgment, companies and individuals will have the current AND previous year’s return outstanding. As a result of this, the following consequences may be imposed.
- The due date of your current tax return and payment will be brought forward.
- Two or more years’ worth of tax payable may be due at once.
- The ATO’s failure to lodge (FTL) on time penalty may be applied ($210 per 28 day period).
- You may be at higher risk of audit or review.
- ATO interest charges may apply (E.g. General Interest Charge (GIC), Shortfall Interest Charge (SIC) and Late Payment Interest (LPI).
- Unpaid debts may be referred to external collection agencies.
- A Garnishee Notice may be issued.
What are some indirect consequences of late lodgment for individuals?
If you’re considering the purchase of property or other assets, it may prove difficult for you to secure a loan if you do not have your latest tax return information readily available. Alternatively, a higher interest rate may be charged. Late lodgment may also impact upon human services benefits such as Centrelink payments, family tax benefits and childcare rebates.
What are some indirect consequences of late lodgment for businesses?
Business owners and contractors in particular will find it challenging to budget, manage cashflow and plan for a secure financial future without a current record of their profit and anticipated tax liabilities. Ensuring a timely tax return will provide more value than simply keeping the ATO on side, it’s an opportunity for you to plan, scale and protect your financial future.
What to do if you have failed to lodge on time
Step One: Understand Your Position
Firstly, recognise that you’re not the only one! It’s not too late to gain an understanding of your current position and get the ball rolling. Here, Wilson Pateras encourage engaging a tax agent. Registered tax agents have greater access to existing tax records via the tax agent portal. In just two minutes, a registered tax agent can view your outstanding returns (post-2001) and help you to understand where you’re at.
Step Two: Prepare Paperwork
Your tax agent will next work with you to prepare an action plan, focused on bringing you up to date. This will involve the collation of important documents, records and information. These include:
- PAYG/payment summaries from employers.
- Centrelink payment summaries.
- Private health insurance information.
- Bank Statements.
- Dividend/ Investment income records.
- HELP/HECS balances.
- Deduction records and receipts.
Again, your registered tax agent may be able to access some of this documentation via pre-filled reports from previous years. Your tax agent will provide advice around deductions based on your personal circumstances.
Step Three: Lodge!
Even if the deadline has passed, it is important to lodge as soon as you can. You’re able to lodge online, via your registered tax agent or lodge a paper tax return. Registered tax agents have special lodgment schedules and can lodge returns for clients later than the standing 31 October deadline. If you are using a registered agent, ensure you contact them before 31 October to take advantage of the extended due date for lodgment.
Get a complimentary tax consultation
Engaging a Wilson Pateras tax agent to assist with lodging your late return will provide peace of mind, knowing that your return/s will be lodged accurately, based on reliable records. Our experts can also provide advice on requesting a payment schedule and future bookkeeping to put you in a positive and compliant position for years to come. Get in touch with the team at Wilson Pateras for a complementary meeting to discuss your lodgment plan today!