What to do if you have overdue tax returns

Please note that information in this article was based on trends from 2011, and may now be outdated. 

Not filing a yearly tax return is considered a crime. If you have been on the run from the ATO, it’s time to get on top of your taxes – here’s what to do…

Over the past 6 to 12 months, there has been a concerted effort by the Australian Taxation Office (ATO) to make taxpayers compliant with overdue tax, FBT and BAS returns. They have introduced measures such as issuing a notice of assessment based on the estimate of taxable income the taxpayer has earned and leaving it in the hands of the taxpayer to either agree with the notice of assessment or lodge an amended return based on the correct figures.

Along with this, they are also issuing administrative penalty notices for failing to provide a document as required by the ATO (i.e. lodging your income tax return). In addition to this, the ATO has started to enforce the late lodgement penalties of $110 to $550 depending on how long the document is overdue, which can increase to $2750 depending on the size of the entity.

These penalties have been the same for years but are often not imposed by the ATO. However, due to the number of outstanding returns, they are more likely to be imposed than not. Penalties, unlike General Interest Charges (GIC), are not easily remitted, and excuses used in the past are not being accepted.

The ATO does not accept that negligence or an unfamiliarity of the tax system is acceptable grounds to have the penalties remitted. This is the reality of not lodging your income tax return on time.

The due date for lodgement for the year ending 30th June 2010 was the 15th May 2011 if lodging through a Registered Tax Agent. For the 2011 financial year, the lodgement date for most taxpayers is the 15th of May 2012. The 15th of May has been the due date for several years and is quite likely going to be the due date for future years, but please check with the ATO or your tax agent. Some taxpayers who lodge late in the previous year will have a different lodgement date. If you are lodging your own tax return via the Taxpack or the ATO’s E-tax, then the 31st of October is the last date of lodgement.

Quite simply, see your accountant or registered tax agent and have your returns prepared and lodged as soon as possible. Gone are the days when saying “I haven’t had enough time to do everything” is an acceptable excuse to the ATO, and you will more than likely be hit with a late lodgement penalty.

The ATO place a high importance on compliance, completeness and lodging information by the due date. As a taxpayer, they expect you to manage your tax affairs or engage the services of an accountant who can assist you and guide you through the sometimes complicated compliance regime.

The old adage that a dollar spent today is one saved in the future has never been closer to the truth than in this scenario. By engaging an accountant, you can save yourself the pain of penalties imposed by the ATO down the track.

List your tax return job.

About author Craig Ball
Craig Ball is a Chartered Accountant at Bentley Partners with more than 7 years of experience gained in mid-tier firms in Brisbane, Sydney and Perth. He is passionate about tax and making sure that his clients receive the best available advice.