Are you late in lodging your tax return? Here’s some information you should know and the steps to take if you are in this situation.
· The Australian Taxation Office (ATO) may or may not initially detect you. Whether they do or don’t, we suggest you take urgent action to get your taxes back up to date to reduce the escalating risks of increased penalty tax, chances of extra audits and growing tax amounts due plus interest. It doesn’t have to be too hard if you stop procrastinating and get started with a good tax agent. They will help with their judgement and do their best for you with the information you have, as well as confirm what is outstanding.
· If the ATO do detect you are late, they typically send you a scary letter threatening penalties and even jail. They may give you the details of outstanding tax returns, for eg. the year and type of return such as bas or income tax return. You may, when late, be given penalties such as general interest charges and ‘failure to lodge on time’ fines. Additionally, the ATO may increase the severity of fines based on what they feel is your level of disobedience or for being deliberate. Even if you haven’t had a demand to do a tax return by a scary ATO letter, we urge to be proactive and take action now and get all your tax lodgements back up to date.
· When in business, getting behind in tax lodgements and tax payable is a fast way to getting snowed under and destroying your business. The longer you allow it to get behind, the tax amounts due will exponentiate with extra interest charges and fines. You want to reduce the nasty surprise of actual amounts of tax and interest due so the sooner you lodge late returns and bas returns the better so that you have a firm amount of what is owed.
· You are also unlikely to be operating with current financial information, which is another dooming habit for a failing business. Forgetting that taxes are one of biggest expense in a business is a recipe for disaster and leaving tax out of your cashflow forecasting is a tragedy waiting to happen. The best way to cope with taxes is by paying them as they are due. This may seem like an understatement but is very true.
· If you are requested to lodge outstanding tax returns and you don’t, the ATO may issue what they call a default notice of assessments which is their guess of your income and is generally over estimated with no deductions. They are obviously much less favourable than tax returns prepared with your own interests in mind by your tax agent. So, don’t let it go that far.
· You may experience anxiety and stress of your late lodgements, not only by you but by your family and loved ones. So take action now. A tax agent can quickly get your taxes back up to date and help you arrange minimal penalties and repayment arrangements if needed.
· If any consolation, you are not alone and there are many people behind in tax obligations, however the longer you wait, the harder it is to reduce tax amounts due and fines, not to mention crippling repayment arrangements that can give you unnecessary financial hardships or additional struggle to your business cashflow.