After working for an entire financial year, you’d think that most people would anticipate lodging their tax return like children waiting to open up their Christmas gifts… but alas, this is not always the case.
A lot of people will delay lodging their return until the last minute because they see it as a hassle or feel confused about how to best go about it. This is why having a reliable accountant is always a good idea.
Lodging your tax returns early applies to both foreign and Australian residents. The ATO accepts early lodgment before the end of the income year if you’re:
- A non-citizen for tax purposes who’s leaving Australia for good
- You’ve chosen not to receive Australian-sourced income other than royalty income, dividend or interest.
- A citizen for tax purposes who’s leaving Australia for good, ceased to be an Australian resident and you’ve decided not to receive Australian-sourced income.
If you know you’ll still be receiving Australian sourced income, you’ll be required to lodge your returns before July 1st 2019. The same applies if you have a Trade Support Loan (TSL) or Higher Education Loan Program (HELP).
What happens if you fail to lodge your tax returns within the set deadline? Here are some valid reasons why you should strive to lodge your 2019 tax returns as soon as possible.
1. Avoid Penalties
A common penalty associated with failing to lodge your tax returns before 31st October is the Failure to Lodge (FTL) penalty. Your first penalty will be a $210 fine, which may go even higher as time goes by.
For every 28 day period that you fail to lodge afterwards, you’ll receive a further $210 fine. For an even bigger entity, the penalty will be multiplied five times of what you owe.
In some cases, you can be fined as much as $1,050. However, you’d be wise not to let it get to that stage.
2. Avoid Criminal Convictions
Is failing to lodge a tax return on time a criminal offence? Yes, it is. It is clearly stated in the Taxation Administration Act 1953 under section 8C. There’s a chance that you could be prosecuted specifically for criminal charges based on the stated constitutional section.
If you’ve been working for the past financial year and you’ve earned something out of it, it’s imperatively necessary for you to lodge a tax return.
If you’ve not been working or you earned less than what’s required for the tax free threshold, you should still inform the ATO via a ‘Non-Lodgment Advice.’
This document basically explains to the ATO that there’s no need for you to lodge this year. That way, you won’t be enlisted in the list of individuals with outstanding returns which need to be lodged. Failure to file non-lodgment advice may prompt the ATO to take legal action against you. Why? They will assume that you earned your income in the last financial year.
If you know your tax return may take a while to process, keep in touch with a taxation lawyer. He/she will advise you on how to file for a penalty and interest remission.
3. Your Tax Interest Rate May Be Increased
If you have an unsettled tax liability, you may be charged interest on the pending amount by the ATO. At the moment, the rate stands at approximately 8.96% p.a. Of course, that rate may increase over time depending on how long you take to pay your debt.
If you don’t settle it within a reasonable period of time, the interest that has been charged on your tax liability may quickly hike your tax debt.
Before you think of slacking any longer on lodging your 2019 tax returns, these three reasons should be motivation enough not to waste any more time. Contact a reliable Melbourne accountant to help you get everything in order and ensure your tax return is lodged correctly.