Unless you’re an accountant like us, then chances are you probably find completing your annual income tax return a boring, or plain annoying, chore. For some, lodging their tax return is so daunting they’d rather avoid it with any excuse possible. For example, HMRC in 2021 cited excuses from pets eating their tax forms to alien invasions (Seriously, read about it here).
While sometimes late lodgments can be amusing, for the most part, there are serious consequences for lodging your tax return late – or simply not at all.
Do I really need to lodge a tax return though?
If you earn more than $18,200 a year, then the short answer is – yes! If you earn less than the threshold though, you may still need to lodge it – If you fall below this threshold and are unsure, Auditax Accountants can help you determine whether you’re required to lodge.
What if I don’t lodge a tax return?
Well, you may be in for a fun time then. If you fail to lodge your income tax return by the yearly cut-off date (casual reminder, for 2022 it is October 31st), then the ATO will issue you a Failure to Lodge penalty (FTL). This fine is recalculated every 28 days after the deadline at a unit price of $222.
If after a period of time has passed and you are somehow not phased or simply indifferent to the fines added to your account, the ATO can then issue you with a default assessment. This is basically an estimated assessment of your income, based on data held by the ATO. As this is an estimate, chances are it will be incorrect and you will be changed a higher tax liability than what you actually owe.
In the most extreme of cases, the ATO may prosecute you for failing to lodge your tax return. The maximum penalty which can be applied on prosecution is currently $9,000, or imprisonment for up to 12 months.
Prison asides, that doesn’t sound too bad. Can’t I just argue my way out of the fines?
You are able to dispute your fines or default assessments. However, you must demonstrate what your actual tax liability is, and remain compliant in paying off your debts and lodging your tax return. In most cases, simply arguing isn’t enough – you should do your tax return.
So, confession… I haven’t lodged my tax return yet. What should I do now?
Luckily, the cut off for this year’s income tax returns is October 31st, so you have plenty of time. You can lodge your tax return yourself by logging into your MyGov account and using the myTax links. However, if you have tax returns that are outstanding, the ATO will catch up with you.
If you have the means to do so, then get your tax returns up to date ASAP. If you are in need of assistance, Auditax Accountants can assist, and make the catch-up process as smooth as possible.
Of course! Auditax Accountants can help you minimise the risk by lodging an overdue tax return on your behalf, or help you with your current tax return. Just call (08) 9358 5599 or e-mail firstname.lastname@example.org to make an appointment.