In the past 12 months we have helped many new clients get up to date with their outstanding ATO lodgements. Generally, it’s individuals with outstanding income tax returns that seem to go under the radar for quite some time and then it’s all guns blazing once the Australian Taxation Office realise the status.
It is possible that the ATO will simply “estimate” your income and send a notice of assessment with tax payable based on the estimate done by them. These are called default assessments and are usually preceded by a warning letter. This is generally less than ideal as the income can be far from the actual situation and you can end up paying too much tax. The receipt of a failure to lodge penalties letter is often enough to send clients hurrying into my office as this outlines a penalty of up to $850 for each year of outstanding lodgement.
We often find that clients who have outstanding returns are due refunds and/or are able to lodge the returns, receive their funds and the only negative recourse is a warning letter from the ATO. Where there is a tax liability from the outstanding returns, this can result in general interest charges. However, where there is a genuine reason for non lodgement a request for remission of all charges and penalties can be applied for. Jes from the office has a fantastic track record of dealing with the ATO and getting a positive outcome for clients in this situation.
I also find that if you voluntarily lodge the outstanding returns prior to the ATO sending letters of demand there is a much greater opportunity for a positive result. At the end of the day, the tax office just want every taxpayer to be lodging on time and meeting their obligations and they are willing to work with you (through us!) in order to get you up to date. If you or anyone you know has outstanding tax returns, activity statements or other lodgements I recommend making an appointment to discuss the options available to you.
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