As we near the end of the tax season, most individual taxpayers have had time to prepare, submit and (mostly) claim a refund back from the ATO. Happy days!
However, for the small percentage that haven’t done their taxes yet, the 31st October deadline looms and there are some important facts you'll need to be aware of - should you not get your tax prepared and submitted in time.
Be aware, the ATO can impose penalties
According to Australian tax laws, the ATO is authorised to impose penalties in case of:
- False or misleading statements or taking a position that is not reasonably arguable
- Failure to lodge a return or statement on time
- Failure to withhold amounts as required under the PAYG withholding system
- Failure to meet other tax obligations
If you are liable for a penalty for any of these reasons, the ATO will send you a letter with the reason for the penalty, the amount and the due date for payment (which will be at least 14 days after the notice is given). You can’t claim a deduction for any penalties you receive from the ATO. The penalty amount is calculated using either a statutory formula, based on your behaviour and the amount of tax avoided, or in multiples of a penalty unit. Source: Australian Taxation Office
The Failure To Lodge (FTL) on time penalty
This penalty may be applied if you’re required to lodge a return, a report or a statement to the ATO by a particular day, but don't. The ATO can be lenient and recognises that people sometimes don’t meet their obligations on time, even with the best intentions. They will warn you by phone or in writing if you’ve failed to lodge. If they do apply a penalty, they’ll send a penalty notice stating the amount and due date of the penalty.
How the ATO calculates an FTL penalty & how they apply it
If you receive a penalty notice for failing to lodge a return or statement on time, you can ask for it to be remitted in full or in part if there are extenuating circumstances - for example, if the failure to lodge was the result of a natural disaster or serious illness. You should phone the ATO if you want to request remission of an amount below $10,000. If it’s more than $10,000, you should post them a letter outlining the circumstances that led to delay in lodgement and why the penalty should be remitted.
Best Practice and Professional Advice
The best way to avoid any penalties from the ATO, is to adhere to any obvious deadlines and commitments you’ve agreed to with them. Being registered Tax Accountants, ITP offers many privileges to our clients including late submissions for the October 31st deadline. In these circumstances, you'll need to make an appointment before this deadline so ITP can negotiate (with the ATO) on your behalf and provide any extensions that are available.
If a deadline has already passed, please don't panic and/or ignore completing your tax all together. Simply contact your local ITP store (as soon as possible) and they will assess your situation and represent you for the best possible outcome. More often than not, the ATO will reason with each person - particularly when a registered tax agent is involved.
With only two weeks remaining, now is the time to let ITP guide you through your tax responsibilities. Happy days are ahead!
Related: The Benefits of Using a Tax Agent