You know your old tax returns need to be lodged, but you keep putting it off. Then a letter arrives from the ATO, demanding that you catch up. What if you owe money? Can you even find the paperwork you need? Which years have you missed? This post answers those questions and more.
First: don’t panic. Tax accountants have been catching up on tax returns for a long time now, so we know how to help.
What if you owe money?
The ATO will often impose late penalties, plus interest on the tax you owe. Sometimes these can be waived, but not until after your overdue returns are lodged.
Once you get your lodgements up to date, we can organise a payment arrangement to give you more time to pay your tax debts. If you take too long to lodge your tax returns, the ATO will be less generous with payment terms, so it’s best to get up to date as soon as possible.
If you are entitled to a refund, the ATO will usually waive late penalties. Employees will probably get a refund; the tax withholding system takes a little bit more out of your wage on each pay day than necessary, so with some standard deductions you should get a tax refund.
What if you can’t find the paperwork you need?
In most cases, the ATO already knows the information, and it is simple for your tax accountant to download it as a pre-filling report.
If you deal with an institution that has your Tax File Number, then they are usually obligated to send relevant information to the ATO before 31 October each year.
Common types of information on a pre-filling report include: employment payment summaries, government pensions and allowances, bank interest, dividends, managed funds, private health insurance, Medicare out of pocket amounts, tax instalments paid, and HECS-HELP debts.
If you really can’t find the information, or it has been destroyed, your tax accountant may be able to help you reconstruct it, and the ATO has some helpful information for individuals and businesses.
What years have I missed?
Your tax accountant can do a simple search online and let you know.
You may not need to lodge
In some situations, such as when your taxable income is below the tax-free threshold, you don’t need to lodge a return. Your tax accountant can lodge a simple online form to notify the ATO that you don’t need to lodge.
Get up to date as soon as possible
The longer you leave it, the worse the situation will get.
If you need help catching up on old lodgements, or you have questions, please get in touch.