Income Tax Return Not Filed for Last 4 Years. What are the Implications?

skjaus2015 on 28/03/2017 - 09:34

Hello Friends,

I have not filed my IT return for the last 4 years. Planning to do it now.

Was wondering if anybody has done the same ( filing tax return for 3 year or above) ?
What implications are there ?
Is there any fine levied by the ATO ? If so, can the fine be waived if given some valid reasons?

Looks like I have to go thru a Tax Agent to file the tax returns.

How do people prepare themselves for lodging the tax return on time ? ( organisation skills, shoe box etc )
Rules for lodging tax yourself and through an agent.

Any advice would be really appreciated.

Financial

Comments

  • lupiter on 28/03/2017 - 09:55

    All I do to prepare is have a folder with receipts from charities. Then I just wait for my PAYG statement, and when that comes I go online and fill in my return.

    If you run your own business (that actually makes money), or have complex investments, then I guess this gets more difficult. I'm sure I could get more money back if I tried, but to me it's not worth the stress or time.

  • Sunny84 on 28/03/2017 - 09:56
    +1

    I didnt do it for 4 years, I did all the outstanding years in bulk on the 5th year and received a warning from the ATO.

  • kipps on 28/03/2017 - 10:01
    +2

    The ATO has the capacity to levy a "Failure to Lodge" penalty. It may also charge interest on overdue debts.

    You should lodge ASAP.

    I do not think that the late lodgement itself will raise the penalties. However, the longer you let it fester, the more likely you will come under the ATO's cross-hairs. Do not let it get that late. You will regret it.

    You can request remission of any penalties should they arise if you have good reasons.

  • geek001 on 28/03/2017 - 10:08

    I did one time due to personal circumstances, I was behind by about 3 years. There are many downsides to falling behind.

    If you are making making a lot of money, usually you can put in your deductions to get some tax back. So, if you don't file your tax return, the money is just sitting in ATO's bank accounts collecting interest.

    If you are collecting Family Tax Benefit and fall behind, Family Services will cut you off as they cannot assess how much you should get due to them not knowing how much you earn.

    Fortunately for me, I have a drawer filled with bank statements and receipts, so I was able to file multiple years by paper. I also found the etax programs for the years that I hadn't filed so that helped quite a bit. I did take me another 2 years to go through my receipts and bank statements to get up to date again. I didn't get a fine because I had deductions every year. If you owe ATO money, there will be penalties involved.

    To get you motivated to collect your receipts, every time you buy something tax deductible, just think of that piece of paper receipt as money. If you buy something $1000 that is tax deductible, that is few hundred dollars tax back depending on your tax bracket. The caveat is that not everything you buy is tax deductible. Best to read the deduction rules carefully or ask your tax agent.

    Good luck.

    Edit: Not filing will also raise red flags at the ATO end, you might get audited, and that is a fate worse than death.

  • Skramit on 28/03/2017 - 10:09
    +7

    GO TO JAIL: Go directly to Jail. Do not pass Go. Do not collect $200.

    • Diji1 on 28/03/2017 - 10:29
      +4

      Man I hate the Community Chest.

  • [Deactivated] on 28/03/2017 - 10:37
    +1

    didn't do mine for 3 years, I got a warning letter in the mail after they where lodged saying no fine because I took it upon myself to lodge the years not them asking me too, I don't know if it's case by case or just automatically you get a warning 1st offence.

  • MercSal on 28/03/2017 - 11:24
    +2

    I had 5 years overdue and was sent to collections. I paid the fine (3.5k by then) got an accountant to do the outstanding years (my tax got weird) and got a refund. After I finalised it all, i rang the ATO and got my fine refunded in 5 minutes.

  • peterpeterpumpkin on 28/03/2017 - 11:26

    Only going from what I've read:

    If they owe you money or you owe them nothing then they'll normally let you go with a warning. However, I've read that if you've already received a fine due to non-compliance after they've already taken action then you still need to pay the fine… If you do owe them anything they can charge interest on your debts (https://www.ato.gov.au/general/paying-the-ato/if-you-don-t-p…).

    I have the same problem as you. I've discovered the ATO has an app that can be used to store deductions and you can legally store receipts digitally. If we make taking photos a habit then it won't be so burdensome next time. Just be sure to backup your photos.

    I've been told it could be better to go through a tax agent (or even a more qualified accountant for businesses) to reduce suspicion. Maybe the tax department sees it as a pre-filtering of your claim?

  • kati on 28/03/2017 - 11:37
    +1

    My partner and I didn't do a few years of tax. When I got the warnings to do it, I got my act together and asked an accountant to submit my tax for me. Got a 5 figure refund - no fine as they had been holding onto our money all this time!

    (and I go on ozB to save a few dollars here and there, but I still can't believe I never did my tax for so long :/ )

  • try2bhelpful on 28/03/2017 - 12:54
    +1

    The way we do it is we have a big red box marked Tax and everything we think might be involved in taxation over the year goes into it, all donation receipts, our PAYG statements, our share information, our interest statements for the year, our deductables paperwork, e.g. for laptops, phones, conferences, etc. We then book our Tax guy about a week in advance and then have to get off our arses to sort everything out. We put it in neat piles according to what catagory and who they belong to and hand it to him in several manilla folders.

  • tomsco on 28/03/2017 - 13:18

    Between here and Whirlpool, I feel I've seen quite a few of these. I'm interested to know the reason people let themselves get so far behind in doing their taxed, especially when refunds may be due.

    • retiredfeline on 28/03/2017 - 13:27
      +1

      Same old story, procrastination. Just hard to work up enthusiasm to collect the documents. Even though I have an agent and I'm usually owed money, I'm guilty of it too, but I'm never more than a few months behind the earliest date I can submit (when various statements arrive).

      Edit: I actually have a system which makes it less painful. I have a checklist of documents to deliver to the agent. It's pretty much the same every year. I just have to devote an evening to collating the stuff in my milk crate.

    • JetLi on 28/03/2017 - 13:42
      +1

      Laziness

    • tomsco on 28/03/2017 - 13:52

      Haha, fair enough. Thanks for the honest answers. I guess my folks just go onto me early, so even now I'm right on top of it.

    • peterpeterpumpkin on 28/03/2017 - 14:17

      Don't worry, I used to think the same way before I realised adulthood isn't puppies and rainbows for everyone. Here's a non-exhaustive list:
      (i) physical or mental illness
      (ii) family breakdown
      (iii) being a victim of crime
      (iv) natural disaster
      (v) going hippie for a few years
      (vi) drifting abroad for a few years
      (vii) being coerced into complex taxation arrangements by familial asset restructuring
      (viii) phobia of the ATO based on others' stories
      (viiii) procrastination
      (x) other factors outside your control

  • weezlebub on 28/03/2017 - 15:06

    my 2c

    I had an accountant who wasn't very good, decided to do my own returns, ended up unemployed with 7 years of tax returns to do …

    Did some research, filled it myself and got quite a bit back with no repercussions …

    Not sure if they've changed the rules in the last 10 years, but it use to be that if they owed you, no fees or penalties, if you owe them, fines & interest on the owed amount …

  • Sweet3st on 28/03/2017 - 15:15
    +1

    Just get in and do them now before they get onto you, that way you will probably skip the fines. I've found the ATO pretty reasonable to deal with. They will take your circumstances into account if you have good documented reasons eg letters from doctors etc

  • Phyph on 28/03/2017 - 18:47

    I suggest that you organise lodging the returns as soon as possible, do not ignore any letters from the ATO. The ATO can prosecute for failing to comply with a final notice, penalties for this are imposed by the courts and can result in a conviction and fine.

  • TransportPosters on 29/03/2017 - 08:03

    I strongly urge people to take things seriously when it comes to the ATO because of what a friend went through about 10 years ago.

    He was on a high income and was taken to court twice by the ATO for having something like 5 years of outstanding returns. In the first appearance he was fined about $2k and had to pay an accountant over $10k for urgent work to get it all done, as the ATO summoned him to court for additional outstanding obligations. The tax agent managed to get everything done before the date of his second appearance, so the ATO cancelled the second summons.

    It wasn't his fault that he was in this situation, it was his lying tax agent which caused all the grief, but he was held accountable (no pun intended) for it as as an individual it was his responsibility to ensure his tax obligations and the ATO didn't care otherwise. After this happened, the ATO introduced the Safe Harbour program which protects individuals from this kind of thing, but that was too late for him.

  • MCPokey on 29/03/2017 - 08:58

    Found out that I had one for 2000-01 & 06-07 outstanding and just done them.
    Got a nice refund too.
    They're not really too concerned about individuals unless you're trying to rort the system.
    If it's only 3 years, then all your info is in their database anyway, so be honest and you'll be right.
    Just do them and you'll be fine

  • [Deactivated] on 29/03/2017 - 15:26

    Well, first of all what is your income, if you are below the tax free threshold you don't have to lodge at all.

    You just needed to send a letter which they print off the ATO website that you don't need to lodge into the future as well.

    If you have a refund pending then why haven't you gone to get your tax back… Usually there is no penalty in these circumstances, but you won't be able to claim any interest payments as tax refunds don't accrue interest at the govt bond rate.

    The ATO actually prefers you not claiming your refund as it means more money for the taxpayers and an interest free loan to the Liberal Government.

  • goosegog on 29/03/2017 - 16:58

    Been there, done that. We always use an accountant as hubbie is in a business partnership. They hit us heavily with fines when we didn't lodge for 5 years. Have learnt by that mistake big time & now are always on time. Nowadays we usually don't have to pay anything as I have become quite savvy re what can & cannot be claimed for + the accountant also advises on yearly changes to claims permissible. Don't forget an accountant or tax agents invoice is also tax deductible.
    Bite the bullet- get it done - a huge weight will be lifted from your shoulders & you'll be able to sleep nights without nightmares. You could also try calling them - believe it or not, they can be very helpful - especially when you explain things calmly & politely. Good Luck 😉

    • skjaus2015 on 29/03/2017 - 17:04

      Hi Goosegog,
      if you are in victoria, can you recommend the accountant. I have found a good accountant is an asset !!
      Please pm me if u can.
      You are so correct, 4 years of pending IT return is a big burden on my head !!
      Getting stuff ready for the last 2 days…

  • HeWhoKnows on 29/03/2017 - 17:49

    Death or Exile. What will it be?

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