It’s getting close to the time of year when your tax return may be on your mind.
You may have even already started looking into what is required to lodge your income tax return. Making sure that your details are correct and that any information regarding your earned income from the year is lodged is the responsibility of the taxpayer and their tax agent.
If during the course of the lodgement of your tax return you fail to meet and comply with the tax obligations expected of you as a taxpayer, the Australian Taxation Office has severe penalties that they can enforce.
Taxation laws within Australia authorise the ATO the ability to impose administrative penalties on taxpayers for failing to comply with their obligations.
As an example, taxpayers may be liable to penalties for making false or misleading statements, failing to lodge tax returns or taking a tax position that is not reasonably arguable. False or misleading statements have different consequences if the statement given results in a shortfall amount or not.
In both cases, the penalty will not be imposed if the taxpayer took reasonable care in making the statement (though they may still be subject to another penalty provision) or the statement of the taxpayer is in accordance with the ATO’s advice, published statements or general administrative practices in relation to tax law.
The penalty base rate for statements that resulted in a shortfall amount is calculated as a percentage of the tax shortfall, or in the case of no shortfall amount, as a multiple of a penalty unit. This percentage is determined by the behaviour that led to the shortfall amount or as a multiple of a penalty unit, which is as follows:
If a statement fails to be lodged at the appropriate time, you may be liable for a penalty of 75% of the tax-related liability if:
To ensure that the statements, returns and lodgements are done correctly this coming tax season, and avoid the risk of potential penalties, speak with a trusted tax professional.