Stressing about an Overdue Tax Return? Or maybe a couple of late tax returns that you're running from?
We understand what you’re going through.
It’s probably been keeping you up for months, if not years. If you want to make yourself feel better, ATO’s assistant commissioner Kath Anderson shared some funny, weird, and crazy justifications people have used to avoid penalties for late lodgement preparation. Some ranged from “My paperwork flew out the car window when I was on my way to see the accountant” to “my ex-wife burnt everything belonging to me, including all of my tax records.”
We’ve seen it all; you’ve been too busy taking care of business, or maybe it just looked too complicated.
Whatever your reasons for being behind on lodgement requirements, it’s always better to get it done now than later. We’ve created this resource to help you with BAS preparation and lodgement and mentally prepare for your tax cleanups and late lodgements.
You’ll find answers to the questions you’ve silently asked about BAS lodgement requirements and the best way to prepare for late lodgement, along with the next steps to take so that you can finally get better sleep.
No matter how challenging late lodgement preparation seems, with the right approach and tools, you can catch up and move forward.
What happens now that I haven't lodged my tax return?
If you’ve already missed the deadline, you’ve likely attracted a late lodgement penalty.
The ATO generally tries to make the process smooth for late lodgers that have a good lodging history. The good news is that the ATO is full of real people, and they understand that sometimes you’re affected by things beyond your control, such as falling sick or being hit by a natural disaster or pandemic.
If this is the case for you, then you can apply—or have your accountant apply—to have the penalty or interest charges removed. However, if you just got too busy to lodge, there might be penalties that apply. The amount changes from time to time, so don’t listen to your pals; check with the ATO for accurate lodgement requirements.
Before you panic, this amount can be smaller than you think, and the ATO wants to work with you to get it paid, often offering repayment plans.
The best way to prepare for late lodgement is to stay calm and start organizing your paperwork immediately. If you’re preparing for late lodgement and BAS preparation and lodgement, remember that even if you’re embarrassingly overdue by years, a good accountant can help you work towards a very agreeable plan for catching up.
For more assistance, explore BAS lodgement requirements to ensure you meet future deadlines.
But I can't afford to pay my overdue taxes?
Believe it or not, you’re not the only one.
We recently assisted a client who owns a plumbing business with the same dilemma. They had been holding back from paying since 2005 because the process seemed complicated. That’s 16 years of unpaid taxes!
But after our accountants walked them through BAS preparation and lodgement, they are now more than halfway done paying their dues. It’s best to start today rather than later (aka don’t wait for 16 years). If you might be late for your payments for one reason or another, the ATO appreciates being notified about it. As the saying goes, “Communication is king.”
This communication shows that your intentions are right, but you have a few setbacks regarding late lodgement preparation. Don’t wait any longer; it’ll get much more difficult to catch up. Sometimes we all just need to put our “grow-up pants on” and face the music.
Being late on your taxes does not make you a bad person or diminish your business; it's just late—that’s all. Remember, understanding lodgement requirements and knowing the best way to prepare for late lodgement can help ease the process. Whether it’s BAS preparation and lodgement or understanding BAS lodgement requirements, taking that first step is crucial.
Will I get prosecuted now that I'm late on lodging a tax return?
It can happen, and a good accountant can be a great advocate on your behalf to try and stop a fine or limit the amount, but depending on the circumstances, it's possible. This is particularly true when it comes to late lodgement preparation. The best way to prepare for late lodgement or manage BAS preparation and lodgement is to stay on top of your lodgement requirements and communicate any setbacks or intentions to pay. Ignoring reminders and communications can make things worse, so proactive management of your BAS lodgement requirements is essential. The more you ignore, the greater the consequences.
What are the worst-case scenarios the ATO might take against my business?
In most cases, businesses are usually behind on lodging for the current or previous year.
This can attract the following actions from the ATO:
- Debt collection agencies may be involved to collect unpaid debts
- ATO may decide to audit or review your business
- You may have to pay interest charges. An example is the Late Payment Interest (LPI) or the General Interest Charge (GIC)
- Two or more years of tax payable may be due at one point
On a personal note...
That property or asset you’ve been planning on buying? You’re not securing the loan for it.
They’ll ask for your latest tax information or charge a ridiculously high interest rate.
Why? You’re a HIGH risk to them.
You’re also likely to lose out on other service benefits like family tax benefits, childcare rebates and Centrelink payments.
Business-wise...
As a business owner or contractor, you’ll have struggles budgeting, managing your cash flow and even planning a safe financial future. This is because you’ll need a current record of your earnings and expected tax expenses.
Making sure that you lodge on time gets you on the ATO’s good side plus it’s a perfect opportunity to plan, grow and protect your future dollars.
"I'm behind on lodgment. What do I do now?
Step One: Know Where You Stand
Firstly, understand that you’re not the only one!
It’s never too late to sort out your position and get things going again.
We encourage working with a tax agent. Registered tax agents have a better reach to existing tax records through the tax agent portal.
Give us two minutes and we can view your outstanding returns (those post-2001) and we’ll help you know where you’re at.
Step Two: Get That Paperwork Ready!
This part needs you and your tax agent to work together to bring you up-to-date.
You’ll need to gather up important documents, records and other relevant information. These include:
- Bank Statements
- Deduction records/receipts (if any are available)
- Dividend/Investment income records
- PAYG summaries from your employers
- Private health insurance information
- Centrelink payment information
- HELP/HECS balances
If you can’t get to all of it, no worries. Your registered tax agent will be able to access some of it from previous years and through the ATO portal. If there are any deductions that you can claim, your tax agent will let you know.
Step Three: Lodging!
Yes, even if the deadline has passed, lodge as soon as you can. Your three options here are through a registered tax agent, online, or by lodging a paper tax return. If you haven’t lodged for far too long (months or years), it’s best to bring in a tax agent. They have special schedules that cater to late lodgement preparation and can ensure you meet all the lodgement requirements.
We’ve been helping our trade clients with BAS preparation and lodgement, cleaning up late lodgements, and securing loans where needed. As a registered tax agent, we can assist in reducing the risk by handling your BAS lodgement requirements and filing your late tax return on your behalf. Contact us today to get started on catching up with your tax!