So you forgot to do your tax return. Now what?

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I’ll be the first to admit that I’m a huge loser. Not because of my Magic: The Gathering obsession, or my predisposition to mid-2000s indie rock (though that doesn’t help), but because when June 30 rolls around, I’m first in line to get my tax return polished off.

I do, of course, wait the two-ish weeks required for the ATO to gather all the data it needs from my employer, but as soon as I get the “tax ready” go-ahead, I’m there, which is really cool and really normal, actually.

However, not everyone is like that, and for many, your tax return is something that usually gets put off and put off until you finally bring yourself to do it, probably in mid-October. Or you cave and get an accountant to do it, which is fine too.

What’s the problem?

However, leave it too long and, and you’ll find yourself in a bad spot. Data from the ATO regularly shows that by about October 15 each year, some 2 million people are yet to file their tax returns.

Many of those will be using accountants, so they get an extra six months on their deadline, but many aren’t, with tens of thousands of self-lodgers missing the October 31 deadline each year. And with it being officially mid-November, if you’ve just realised you’ve forgotten to do your return, well, sorry.

What you can do about it

However, it’s not all bad news, and if you act quickly enough, generally fixable. Here’s what you need to know:

• How strict is the ATO about tax deadlines? The taxation office has a bit of a reputation for being the big bad wolf of the finance world, but according to Mark Chapman, head of tax communications at HR Block, when it comes to late lodgement, the ATO isn’t such a hard taskmaster. “The ATO tends to be fairly understanding if you’re only a little late and have a good reason,” he says. “They know that life gets busy. If it’s a genuine oversight, and you get on top of it quickly, they may not apply penalties straight away.” However, Chapman notes if you’re a repeat offender – or if you owe a significant amount in tax – the ATO is far less likely to be lenient.

• What penalties could I face? If you’re thinking you might get away with a small fee and a slap on the wrist if you don’t file your tax return, think again. Failure to Lodge on Time (FTL) penalties starts at $330 for individuals and can increase by $330 every 28 days, up to a maximum of $1650. If you owe tax, you’ll also be charged interest on the amount you owe until it’s paid. In extreme circumstances, the tax office can issue “default assessments”, where it estimates your income and tax and charges you accordingly, which will rarely be in your favour.

• I’ve missed it! What should I do? Chapman’s first message is “don’t panic, but don’t ignore it either”. Taking action to lodge your return as quickly as possible is more likely to land you in the ATO’s good books. Log on to myTax and complete your return, with Chapman noting that if you’re in line for a refund, you generally won’t be penalised. However, if you owe tax, he recommends contacting the ATO to set up a payment plan. “If you have a valid reason for being late – such as illness, natural disaster, or personal hardship – explain that to the ATO; they can remit penalties in genuine cases,” he says. “The key takeaway is: communicate early, lodge quickly, and don’t let it snowball into a bigger problem.” If you’re multiple years overdue, you might have missed the boat when it comes to avoiding penalties, but you can lodge prior year’s returns via myTax all the way back to 2016.

• Is it too late to get an accountant? If one of the reasons you’ve been putting off doing your return is because it’s too complicated, the good news is it’s not too late to employ the help of a tax agent. “Even if you’ve missed the deadline, a registered tax agent can help you get back on track, negotiate with the ATO, and sometimes access extended lodgement deadlines under the agent program,” Chapman says.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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