Sometimes, life happens, and you may end up missing the tax deadline. As a general rule, if you earn higher than the tax-free threshold, which currently is AUS $18,200, then you are mandated by law to file a tax return. If you have not lodged your taxes and file a late tax return this year or have an outstanding one for a few years, you need to get things updated for peace of mind. Besides, it is your duty as a good citizen to pay your taxes. Here’s what you can expect if you’re stuck in this scenario.
What Must I Do If You Have Outstanding Taxes?
It is natural to feel worried if you have not complied with your taxes. Don’t stress because it doesn’t automatically mean you will end up in jail for not filing your taxes on time. If you don’t make the tax deadline, the ATO will just apply certain penalties. Of course, you will pay late payment fees as your sanction for not making the deadline. If you need help, seeking advice from a tax consultant will provide clarity. A professional can help you organize your documents for all your neglected returns. More importantly, they can help you maximize your deductibles to help lower your tax payments legally.
What If My Income Falls and I Don’t Need to Lodge a Return?
If you have been earning less than the threshold and have not paid any taxes, you are not required to lodge your taxes. However, if you suddenly lose a job or your income takes a cut, connect with the ATO to submit non-lodgement advice. This explains why you are suddenly not filing a tax return and assures they do not list your name as having an overdue or late tax return. If you fail to do this, the ATO will assume you are late and perform compliance measures against you. For best results, prepping ahead and giving non-lodgement advice helps.
What Fines Will I Pay For Failing to Meet the Deadline?
The first thing the ATO will do is provide an FTL or failure to lodge penalty if you don’t make the due date. Then a fine will be calculated, which you have to pay. The fee rate is one penalty unit for each period of 28 days with up to a maximum of five penalty units. As of this date, the value of a penalty unit is $222, so the maximum penalty stands at $1,110. However, it would be prudent to check with a tax consultant to see if you can minimize the penalties, especially if you have suffered a serious illness or are feeling setbacks after weathering a natural calamity.
Will I Face Prosecution For Late Tax Payments?
Although it is not very common, the ATO can and has the power to prosecute you if you continue to evade paying your taxes. Today, the maximum penalty that can be applied for legal prosecution is $9,000 or facing imprisonment for 12 months. So you can avoid dealing with this possible worst-case scenario, it would be prudent to organize your documents and pay your, especially if you have been remiss for several years.
Final Wrap Up
If you always lodge a late return, it is believed that you are at risk for review and audit by the ATO. Thus, pay your taxes on time to avoid this scenario. If you have one or more outstanding tax returns, consult a professional to help you sort things out. No one can escape their taxes, so taking the right measures and doing it fast assures you lessen the penalties and make it less painful.