The Importance of Knowing When to Lodge a Tax Return
Managing your financial responsibilities can be problematic, especially when other obligations get in your way. Nevertheless, you shouldn't let these unexpected occasions prevent you from performing your legal duties. Staying on time is necessary for different life routines, like going to work or catching the bus. This is even more crucial for official transactions like lodging a tax return. It's a procedure to ensure that you're staying up-to-date on your accounting and to avoid any potential penalty fees.
Understanding the purpose of lodging a tax return
By June 30th, taxpayers must lodge an annual tax return after the end of the Australian income year to tell the Australian Government about your financial liabilities. It's a report stating just how much income you received and paid taxes during the fiscal year. After doing so, you will receive a notice of assessment about your financial records. Additionally, you will get an update on necessary tax refunds or debts that are under your name.
Breaking down the consequences of failing to lodge a tax return
Declaring your income and corresponding paid taxes is mandatory for Australian citizens and small business owners. Even if you're earning below the threshold for paying tax, you must still declare your income for that year. Failure to lodge a tax return will put you at risk of paying fines for every 28 days that you are late with your tax returns. You will receive different penalties depending on your offence.
For small business entities, they will receive a Failure to Lodge (FTL) penalty that comes through a cumulative penalty unit ($222) for every 28 days of an overdue statement. This reaches a cap of file penalty units for a maximum of $1,110 in fines.
For medium business entities, the FTL penalty they'll incur will be multiplied by two based on the computation of dues above. You qualify as a 'medium entity' if you have a medium withholder for PAYG withholding purposes or if your current GST turnover is beyond $1 million and less than $20 million.
If you don't lodge a tax return in time, an 'external collection agency' will obtain your lodgement on the Government's behalf. This can damage your credit score in the long term, even more so if you choose to ignore the collection. Thankfully, you can file for an extension if you have a viable reason for a late submission.
Hiring a helping hand for your financials
Although you can technically lodge your tax manually, you have the option of using digital tools to help you out. myTax is an online software that Australian citizens use to input their financial bookkeeping. However, it's best to hire a professional accountant to ensure that you're not at risk of missing out on critical details or transactions in your records.
The deadline for lodging a tax return is on October 31st. However, you may extend the deadline to May 15th the following year if you're able to work with a certified accountant. This adjustment in dues is to give you time to ensure that you can pay any instance of outstanding bills.
Due to the COVID-19 pandemic, the Australian government has set up some provisions for taxpayers and business entities who had to budget their finances. 'Safe harbour' can protect you from incurring any penalties from lodging your tax return on time. It's best to consider hiring an accountant to understand how you can benefit from this ruling to minimise your current financial setbacks.
If you want to ensure that you're lodging your taxes properly and accurately, you should hire the best accountants in Gold Coast at New Wave Accounting. Our professional accountants can give an in-depth assessment of your financials to prepare it for any legal processes. Contact us today, and our accountants will ensure your company's stable and managed growth!