The Consequences of Failing to File Your Taxes on Time
Nobody likes to discuss anything about taxes or even think about accomplishing its annual filing—and this is precisely why we want to open up the topic! If you’re not aware, personal tax returns are due every October of the year, while business tax returns are due four months later, at the end of February. While these deadlines seem far away, there’s no such thing as beginning to file your taxes too early.
For your information, corporate tax returns prove to be more complicated than personal tax returns, as business finances are sometimes more sophisticated than home finances. In addition to that, business tax returns could constantly change the return you file based on the information you include and your current firm's standing. If you own a business, you must file a tax return regardless of whether you made a profit.
Now, we’ll talk about the consequences of failing to file your taxes on time. Read on as we discuss everything you need to know!
What If I Do Not File?
Failing to file a tax return on time may result in a penalty that escalates over time. In Australia, the Australian Tax Office (ATO) has the sole power to prosecute businesses that have not filed their returns on time. However, the majority of small and medium-sized businesses are treated with compassion.
Generally, the ATO is lenient in these cases, and sanctions are reserved for situations in which you have superior tax returns despite a bad filing history or requests that were previously ignored. Often, you will be given a strategy to get back on track.
What If I Haven’t Filed a Tax Return in Five Years?
Penalties, default assessments, and criminal prosecution are reserved for the most egregious of offences. However, consecutive failures to file and pay your taxes on time increase your penalty and puts you in danger of a harsher assessment. The more you prolong it, the worse the outcome may be.
For one, significant evidence of tax evasion could face you with criminal charges, resulting in additional fines and jail time! Additionally, beyond failing to file and the penalties that come with it, you risk losing and forfeiting various cash or financial benefits you can claim from the ATO. To help you with your business finances, simply employ a trusted business accountant.
How Long Can I Continue to Evade Filing Taxes?
Failure to file a personal income tax return may result in an increasing penalty over time. Likewise, businesses are subject to several penalties:
One penalty unit per 28 days for small entities, up to a maximum of five
Two penalty units per 28 days for taxable income between $1 million and $20 million
Those with a net worth of more than $20 million will be required to pay five penalty units every 28 days
Multinational corporations incur a penalty of 500 penalty units for each missed period
Can I File for Two Years Concurrently? How Do I Go About Filing Back Taxes?
Our strongest recommendation is that you file your business tax return on time, no matter what. However, we also acknowledge that there are occasions when you must take a year off.
As with your personal tax return, you can go back to a previous year and complete an incomplete tax return. Additionally, you must maintain a critical record of all receipts and documents, as not everything will be automatically recorded.
Running a business is challenging enough, and to avoid unnecessary hiccups, make sure you are on top of your business's tax filings. More than penalty increases, you must keep in mind that failing to file your taxes could affect the stability of your business, your employees’ welfare, your reputation in the industry, as well as affect your personal life.
Now that you know what happens when you commit tax evasion, please be mindful and accomplish the task as a responsible business owner.
Are you looking for the best accountant on the Gold Coast? In New Wave Accounting, we provide end-to-end accounting and bookkeeping services that help scale and grow businesses. We make sure to understand your industry to create tailored solutions for your needs. Contact us today and take your business to the next level!