File tax returns on time

The Australian Taxation Office has issued a warning to lodge returns soon, writes Sophie Elsworth

FAILING to lodge tax returns annually could end up leaving Australians with massive debts running into hundreds of thousands of dollars.

Alarming new data from the Australian Taxation Office has revealed some worst-case scenarios of taxpayers who were left saddled with hefty debts because they did not keep their financial affairs up-to-date. The ATO says:

• An individual failed to lodge returns for 19 years and had tax debts of more than $200,000 including interest. About 17 months on the person was still paying back the debt.

• A person failed to lodge returns for 16 years and accumulated a tax debt of nearly $300,000. Within months they declared bankruptcy.

• A person failed to lodge for three years and was left with a tax bill including interest costs of more than $100,000. Half of the debt was repaid when the lodgments were brought upto-date but interest has continued to accrue on the remaining debt.

The tax time clock is ticking. If you are filing your own return, the deadline is October 31. However, if you are choosing to engage a registered tax agent you could lodge up until midMay 2020.

The Tax Institute’s tax counsel, Stephanie Caredes, said it was vital taxpayers lodged on time “so you don’t incur penalties and interest”.

“Get organised and put some time aside one Saturday afternoon,” she said.

“It’s not the most fun task but everyone has got to do it.

“If it’s looking too difficult to do on your own, you still have time up your sleeve to go and find a tax agent who can help you out.”

For those who still need to lodge from previous years, an ATO spokeswoman said it was never too late.

“Even if you missed a return from over 20 years ago we will be able to process it,” she said.

However, she warned that penalties and interest charges could be applied if you failed to pay the correct amount of tax.

In some instances the ATO may actually owe you money.

“If you lodge a prior year return that results in a tax refund, and you have no existing liabilities with the ATO or with other government agencies, the ATO will still issue you this refund,” the ATO spokeswoman said.

“One taxpayer lodged their 1996 income tax return this year. In August we paid them a $368 refund.”

H & R Block director of communications Mark Chapman warned those who had let their tax lapse for years could be looking at “serious financial implications”.

“You really need to have a professional involved who can negotiate with the ATO and investigate whether there may be legitimate reasons why you failed to lodge, such as ill health or deaths in the family,” he said.