ATO Warning Over $1,820 Nasty Surprise as Fine Increases for Missing Tax Return Deadline
As the new financial year begins, millions of Australians are being reminded to ensure their affairs are in order. While workers are advised not to rush and lodge their tax return before pre-fill data is collected by the Australian Taxation Office (ATO), it's also important not to leave it too late.
The ATO has increased the cost of getting on its bad side. From today, July 1, the cost of a penalty unit has jumped from $330 to $364. The ATO states that these penalty units "are there to encourage all taxpayers to take reasonable care in complying with their tax obligations." This includes filing your return by October 31 if you're handling it yourself.
Dr Connie Vitale, Director of Western Sydney University’s Tax Clinic, highlighted that Aussies will especially need to act if they receive a message from the ATO. She said:
“If the ATO has actually asked you because they've realised that you haven't lodged, then the chances of you being penalised are greatly increased.”
The potential maximum penalty for not filing your tax return is now $1,820. Dr Vitale explained:
“What I’ve found with penalties is they normally are not deducted from the refund, they are sent out at a later point.”
If you miss the deadline due to extenuating circumstances, she advised:
“You should definitely speak to the ATO and have those fines lifted. The ATO is quite reasonable if it's a legitimate reason.”
If you’re not planning on doing your tax return yourself, you’ll need to engage a professional tax accountant by the same October deadline. However, this means they can lodge your return months later.
“Depending on the lodgement numbers of the tax professional that you're visiting, you can actually have to the 15th of May the following year,” Dr Vitale explained.
Tax accountant Belinda Raso warned that Aussies who are caught out and simply fail to lodge their return can be hit with one penalty unit for every 28 days your return is late, to a maximum of five penalty units. That means the maximum fine has increased from $1,650 to $1,820.
She called the increase to the cost of a penalty unit “a nasty little start of the financial year surprise.”
“There must be a cost of living crisis in the federal government,” she mocked.
WFH Deductions Will Require Good Records
Dr Vitale reminded office workers that they’ll want to keep detailed records of any expenses they are claiming related to working from home as well as the actual number of hours of work logged at their home residence.
“If you're claiming the working from home expenses, you actually do need a record saying how many hours you've worked from home,” she said.
“You can't just sit there and pull out a calculator or count on your fingers and just say; ‘Oh, yeah, that's close enough’, because the ATO can ask you to actually show how you calculated your figures.”
While the tax office does rely on its growing data matching powers and the myriad of “red flags” its systems can produce, among those taxpayers the selection process for choosing an account to audit is somewhat “random,” Dr Vitale said.
“What I mean by random is there's all of these red flags, and then they'll just choose one of them.”
“If there's a change in the way that you're claiming, then it increases the risk of a red flag, but the chances of you getting an audit is still very slight.”
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