DO YOU HAVE OVERDUE TAX RETURNS?

While many individuals and businesses take their tax and lodgement obligations seriously and try to maintain their legal requirements, even the best of intentions can falter and lead to a failure to meet their obligations. Whether this failure is accidental or deliberate, it is crucial for every individual and business owner to take corrective steps to avoid the penalties and fines that can come along with staying silent and hoping it all goes away.

If you are late with your obligations, Hills Accounting in Hobart can assist you and talk to the ATO on your behalf. The highest number of multiple-year tax returns we have completed at one time covered over 30 years and went back to pre-decimal currency. Some of the returns had to be calculated in pounds, shillings and pence! We got a very good outcome for that client, as we do for all our clients.

The Australian Tax Office (ATO) considers several areas where returns and activity statements must be kept up to date. While this is not an exhaustive list, these would be considered some of the more important ones.

Income Tax

Income tax is the tax on the income earned by individuals and businesses. Businesses need to lodge an annual income tax return with the ATO and may need to pay tax on their taxable income.

Goods and Services Tax (GST)

GST is a 10% tax on most goods, services, and other items sold or consumed in Australia. If your business is registered for GST, you need to include GST in the price of your taxable sales, claim credits for the GST included in the price of your business purchases, and lodge a business activity statement (BAS) with the Australian Taxation Office (ATO) either monthly, quarterly or annually as registered the ATO.

Pay As You Go (PAYG) Instalments

'PAYG instalments' is a system for making regular payments towards your expected annual income tax liability. If you are required to pay PAYG instalments, you will need to calculate your income for the instalment period, work out the tax on that income, and then pay that amount to the ATO. Alternatively, you can just pay the amount that the ATO estimates to be your quarterly instalment.

PAYG Withholding

PAYG withholding is where you pay tax to the ATO on behalf of your employees or other businesses you deal with. You are required to withhold tax from payments you make to employees and other workers (such as contractors), and also from payments you make to other businesses if they don't provide you with their Australian Business Number (ABN).

Fringe Benefits Tax (FBT)

FBT is a tax employers pay on certain benefits they provide to their employees or their employees' associates (e.g. family members). FBT is separate from income tax and is based on the taxable value of the fringe benefits provided.

Superannuation

Employers are required to make superannuation contributions on behalf of their employees to a complying superannuation fund or retirement savings account. This is known as the Superannuation Guarantee (SG).

It is important to note that the inability to lodge the required information on time is a separate issue from being able to make payments. Therefore, business owners should not be unwilling to lodge information just because they cannot make a payment at the moment. The ATO is very willing to discuss these matters, provided the business is taking steps to work with them on the issues.

For the purpose of this article, let's focus mainly on Tax Returns and discuss some of the steps you should take.

Get The Help of a Professional

Whether you are already late in completing your returns, or you just want to make sure you do not find yourself in this position, getting assistance is the first and most crucial step. A qualified professional like HILLS ACCOUNTING HOBART can help you navigate the complexities of tax lodgements and payments. They speak the language of the ATO and can greatly assist in negotiating with the ATO on your behalf if necessary.

Understand The Deadlines

Hills Accounting will help you to understand the deadlines you need to meet and what is required to meet them, thereby reducing the risk of problems arising. At the top of this list is collecting all the necessary documents such as payment summaries, bank statements and tax invoices together in one place to help you prepare the necessary returns for the ATO.

Lodge all outstanding returns

Even if you cannot pay, it is important to lodge all outstanding returns and activity statements. This demonstrates to the ATO that you are making an effort to meet your obligations and you will find them far more amenable to helping you and keeping penalties to a minimum.

Talk To The ATO

If you are unable to make payments, contact the ATO to discuss your situation. Hills Accounting can do this on your behalf. They are able to help arrange a payment plan or offer other assistance to help reduce the possibility of fines and penalties.

Stay Current

Once you are back on track make sure you stay ahead of the curve. This applies whether it is simply lodging the returns on time in the future or meeting timed obligation payments on the due date.

Remember, it is always better to lodge on time even if you cannot pay, rather than not lodging at all. Taking these steps can help avoid the 'Failure to lodge on time penalty' which may be imposed by the ATO.

It is essential that you act as soon as possible to rectify the situation, once it has become apparent. The ATO is likely to apply penalties for failing to lodge a tax return or Business Activity Statement on time, however, they may remit or reduce the penalties if you voluntarily disclose the oversight, have a reasonable excuse and you are prepared to make arrangements to rectify the situation.

If you want to take the stress out of this process and make life far easier, HILLS ACCOUNTING HOBART contact us today at admin@hillsaccounting.com.au or call us on 03 62737800.