Like eating, sleeping and drinking, filing a tax return is just one of those things we just have to do. Nobody likes doing it - and October 31 seems to arrive so quickly. So is it really such a biggie if you don't get it in on time?
You may be giving the Government a free loan
Most individuals get a refund after they lodge their return. Getting it in late means the Government gets to keep your money for much longer than they have to and they don't pay interest.
The bank will care if you are looking for a home loan
An important element in getting a home loan is being able to prove that you earn what you say you earn. Banks will want to see a tax return and Notice of Assessment as proof.
You can be fined
You can be fined. The amount of the fine depends on how late. It starts at $180 and can go as high as $900 if you are more than 113 days late. You may also have to pay interest on any amount you owe.
It is best to lodge on time even if you can't pay the amount you owe. You can usually arrange a payment plan. A late payment is better than a late lodgment.
What happens then?
There are a number of things the ATO can do if you are late.
- Send you a reminder letter
- Fine you
- Issue you a demand for lodgments
- Issue a default assessment warnings - this is where they tell you what they think you owe them and its up to you to prove they are wrong if you disagree
- Send you a bill (called a statement of account)
- Issue you a reminder to pay
- Refer you to a debt collector (not good for your credit)
- Ultimately take legal action to enforce the debt.
What should I do if I am late?
First don't panic - you won't go to jail! It's just a few forms that need to be lodged. Often collecting the information from a few years back can be the toughest bit. You can do it online or go see a tax agent.
The ATO will usually negotiate
Come clean if you have a problem. Despite their scary reputation, the ATO will usually negotiate more time to lodge or pay taking into account your circumstances. In many cases they may waive fines and agree a payment plan.
Only make an agreement if you are sure you can stick to it
The ATO takes a very dim view if you agree a payment plan with the ATO and fail to keep up your side of the bargain. These means if you miss a payment or fail to comply with other obligations (like lodging and paying you next years tax), they will cancel the plan and you will need to pay in full.
Don't put it on your credit card
The ATO charge interest at 10% on late payments and can often be convinced to reduce or waive this on a payment plan.
Founder and Chief Sherpa
With over 25 years in Financial Services from consulting to management, Vince Scully is the go-to guy for wealth management and financial advice. Vince founded the Calliva Group; a fund manager, product issuer, advisor and lender to Government and private clients. Vince is an advisor to the Wealth Management Industry, and prior to his role as CEO at Calliva, a senior member of Macquarie bank’s infrastructure team.