What happens when you don’t lodge an Aussie income tax return?
STEVE DOUGLAS advises on the importance and relevance of lodging an Aussie income tax return.
Q I received a penalty notice from the Australian Tax Office for not lodging my tax return. What should I do?
A It’s a legal requirement to lodge an Australian Income Tax Return if you are receiving taxable income in Australia. When living out of Australia, this income is usually from a rental property as overseas income is non-taxable. Many are under the impression that if expenses such as interest costs are greater than your income, you’re not required to lodge a return. This is not the case. You’ll be required to lodge a tax return and report income even when you generate as little as A$1.
For many years the Australian Taxation Office (ATO) didn’t have resources to adequately police non-lodging taxpayers and in turn taxpayers were not contacted. Subsequently taxpayers felt no need to lodge their tax returns. The general taxation policy in the past was if no tax was payable then no fine would be imposed. In 2000 the ATO changed this ruling and taxpayer’s were fined for not lodging a return even where no tax was payable.
If you are lodging your own tax return and received Australian sourced income in the year prior to June 30, you must declare the income and claim expenses by October 31 this year. If you engage a Tax Agent you’ll be granted a lodgement extension until April 2012. If you didn’t receive Australian income to June 30 2011, but lodged an Australian tax return in the past, it’s important to advise the ATO so you don’t get penalised. A fine of up to A$550 may be imposed if you do not alert the ATO. If you’ve been charged with a late lodgement fine, it’s possible a remittance in part or full may be considered by making a request to the ATO. You will be asked to explain why the tax return was late and also promise to lodge returns promptly in the future. There’s no guarantee the penalty will be reduced although in the past the ATO has been reasonable with rulings. However, expect tougher enforcement in the future. A penalty reduction will not be considered until outstanding tax returns have been completed and lodged. If tax is payable, a late payment penalty may also be enforced.
Lodging a tax return is not a complicated matter, so don’t procrastinate. If you have outstanding tax returns contact the ATO or an Australian Registered Tax Agent from Australasian Taxation Services to discuss your situation and confirm lodgement of your returns. This will ensure you keep up to date with your requirements and hopefully have a minimum of penalties imposed.
