31 October is supposed to be scary because it’s halloween, but the real thing to watch out for is that it’s also the date by which you have to lodge your tax return. Your tax return may be for just your individual income, or the income that’s included from your business. For companies, the due dates tend to be in the early months of the following year, think January to May. Either way, the ATO are strict about enforcing these deadlines – so don’t leave it to the last minute.

So what happens if you miss this date? Here we will list some of the consequences of not lodging your tax return on time and exemptions to this.

Penalties

If 31 October passes and you haven’t lodged your tax return you will receive a Failure to Lodge (FTL) penalty. The first penalty is a fine for $210, but these sharply increase as time goes on. For each 28 day period afterwards that you don’t lodge, you will be fined a further $210. The maximum amount you can be fined is $1,050 – but you don’t want to let it get to that stage. It is also a general rule that the ATO won’t issue you with an FTL penalty if your tax return doesn’t result in you owing any tax to them (but rather you get a refund or the amount is balanced). However, this isn’t guaranteed and you will need to contact a tax lawyer to determine if you’ll be made to pay the FTL fee.

Interest

If you have an unpaid tax liability, then the ATO will charge you interest on the amount owing. The rate currently sits at 8.96% per annum but these rates increase over time. If you don’t pay within a reasonable amount of time, the interest charged on your tax liability will quickly increase your tax debt.

Options if you miss the deadline

If you can’t make the deadline, you’re not doomed to be fined, or to pay interest on any tax liabilities you may have. Here are some ways you can be exempt from paying the late fee:

Applying for an extension

You can apply for an extension of the 31 October deadline if you have no pre-existing debts with the ATO, have no child support or Centrelink payments owing and your history of complying with ATO deadlines and requirements.

The safe harbour provision

You can claim an exemption to the FTL penalty if an accountant or tax agent was hired to lodge your tax return. This applies if you gave the agent or accountant all the necessary tax information and they did not act recklessly or intentionally disregard the law.

Non-lodgement advice

If your income was under the threshold from the period 1 July 2017 to 30 June this year, then you won’t generally have to pay any income tax. However, it is recommended that you still lodge a Non-Lodgement Advice form just in case the ATO has you on their records as owing a tax return and then takes measures to make you comply. Further, if you operate a business as a sole trader, you need to lodge a tax return regardless of whether or not your income is above the $18,200 threshold.

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Jackie Olling

Jackie is the Content Manager at LawPath and manages the content team. She has a Law/Arts degree from Macquarie University and has worked in the legal industry since 2014. She's interested in legal tech and the opportunities it offers to not only the legal industry, but all people.