What if I am late lodging my tax return

 

If you don’t have a tax agent, or you are not up to date with your tax returns, your tax return will be due 31 October.

 

Appoint a tax agent – due date 15 May next year

If you are added to a tax agents’ lodgement list before 31 October, you will likely obtain the extended due date.

For 2012 returns, most individuals will be 15 May 2013.

However, if you had more than $20,000 additional tax to pay after lodging your last return, your due date will be 31 March 2013.

Also, as mentioned above, if you have prior year returns outstanding, then your later returns will be due 31 October.

 

Consequences of not lodging

The ATO have been getting stricter with those who don’t lodge their tax returns. Even though you may say that you are saving the ATO money if you are due a refund, they want to encourage everyone to lodge their returns.

 

If you are due a tax refund:

Failure to lodge penalty

The ATO is now charging a penalty of $110 per 28 days the return is late up to $550 per return.

Note that if it is the first time you are late you will usually receive a warning letter saying that the ATO won’t apply a penalty… this time.

 

Refund interest

The ATO might pay a small amount of interest if you haven’t lodged your return. But this is not nearly as much as you could get if the money was in your bank account. Also, the ATO will only pay this interest if your refund is substantially overdue.

 

If you have tax payable

If you have tax to pay, in addition to the failure to lodge penalty you could also be charged interest.

General Interest Charges

The ATO charges interest from 3 weeks after the tax return due date. For example 21 November for the 31 October deadline.

The ATO interest rate is usually between 12-14% and it accrues daily (although it is often charged monthly).

 

Don’t delay lodgement if you need to pay – make a payment arrangement

Because you will be charged interest from 3 weeks from the due date, it usually doesn’t make sense to hold off lodging your tax return if you are overdue.

Even if you don’t have the cash to pay the ATO now, you can make a payment arrangement and get up to date with your tax liability.

 

Delaying only helps things build up

Consider if you owe the ATO $5,000 (and your tax return is overdue). If you lodge now you will be charged GIC until now and can make a payment arrangement. If you hold off for a year you will be charged extra GIC and might have another year tax return payment as well.

 

Remission of penalties

It is possible to have penalties remitted by the ATO. If you call them, and explain your circumstances they may remit penalties or interest charged. Your tax agent can also apply on your behalf.

 

Don’t want to get a tax agent

E-tax has a cut-off date (you can’t lodge prior year returns via e-tax).

If you don’t want to appoint a tax agent, you can print prior year tax returns from the ATO website. Note that if you have prepared your return in E-tax, the ATO does accepted a printed copy of your E-tax return

Posted in Tax

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