1. I have not lodged my tax return for years. And ATO has not chased me for lodgement. Do I still need to lodge a tax return?
The taxpayers are required by law to comply with the tax lodgement when its due. It is not ATO's responsibility to remind each taxpayer his or her obligation. So you should manage your overdue returns actively.
If not, it is only a matter of time for ATO to start chasing the lodgement. And such actions request the taxpayer to complete the lodgements before restricted deadlines, which is a difficult mission if your book is also not up to date.
2. Would there be any late lodgement penalty? Even if I should get a refund from the lodgement?
Failure to lodge on time penalty is charged based on the condition of each case, despite whether the return results in a refund or tax liability. But in general, the late lodgement triggers $180 penalty per return on an annual basis. This penalty, however, might be remitted if the taxpayer has a valid reason for late lodgement and can prove their ability to meet future lodgement and tax payments.
So it is a good idea to talk to your accountant about your circumstance and get prepared for the penalty remission application. And also be aware that the general interest is charged on the outstanding tax debt. So the late payment can be more expensive than you think it would be.
3. What is other consequence of not lodging my tax return?
Failure to lodge on time can also trigger the default assessment, in which case the ATO choose to finalize the return based on the information available to them. This practice is becoming more popular during recent years. The problem with default assessment is it usually not giving the taxpayer the best result due to the limited information available to ATO. And once the default assessment is issued, it is extremely hard to fight back even if you have the documents to sustain your claims. And it is even worse when the default assessment results in a huge tax liabilities, which means taxpayers may have to suffer more financial depress that they could avoid by lodging on time.
4. I have lost most of my receipts, can I still claim any expenses for the returns?
There is no simple answer to this question. Even if you lost all receipts, you might still be able to obtain the bank statements at the branch. Under certain circumstance, tax agents are still able to prepare your book based on the statements. This request you to work closely with the agent as they have to keep inquiry you about the unusual transactions they detect from the statements.
5. What if there is a huge tax liability after the lodgement. What can be the possible outcomes?
Normally the late lodgement results in penalties. And if there is tax payables result from GST, income or PAYG withholding, the interest charge applies. All these factors result in the tax debt significantly arise after lodgement. This is another reason why taxpayers keep putting the lodgement off.
Unfortunately, as long as the return is not lodged, it is only a matter of time before ATO given you the nasty letter. The best action is to bring your book up to date. Then you have a thorough review of your tax and financial position. Then you put together the strategy plan of how to trade on and recover. Then you implement the strategy into actions with the help of the professionals.
6.How much would this job cost me?
In our consultations, we have come across the following concerns by taxpayers who has with outstanding tax lodgement:
“My accountant told me it cost $10K to prepare the return up to date. And they request the payment up front.”
“They refuse to do my tax return because I might go insolvent after the returns are lodged.”
“My accountant charged me another $3K for the additional work involved on top of the original bill.”
At Tax Management, we do not want the accounting fee to be another obstacle for you to get the lodgement up to date. We charge low price fixed fee for managing your tax affairs. The service covers preparing the outstanding lodgements, strategy planning and negotiation with ATO. So you will not receive surprise bills for managing your tax debt. And we can put the payment into an affordable payment plan. And we also provide free initial consultation to help you understand your unique situation. Please feel free to contact us if you need urgent help to manage the tax.