Penalties For Failure To Lodge Returns

Summary

On 1 July 2001, the penalty regime for failing to lodge tax returns was dramatically altered. Affecting all return lodgments for 30 June 2001 year onwards, the new regime significantly increases the quantum penalties, which can be imposed. As well, the regime applies penalties not just for late lodgement of income tax returns but to a variety of other returns. (It becomes even more imperative that all lodgement requirements are met on time.)

What are the basic penalties?

The basic penalty amount is $110 for small entities, $220 for medium sized entities and $550 for large entities, all of which can be imposed as soon as the lodgement is overdue.

In addition, the penalties will also increase longer that the return is outstanding. For every 28 days the lodgement remains overdue an additional penalty will be imposed. This will continue to a maximum of five times the original penalty. The maximum penalty that can be imposed once the lodgement is 113 days late or 16 weeks and one day late.

If you are a larger entity and the lodgement is 113 days late, a penalty of $2,750 (5 times $550 will be imposed.

What returns are affected?

Most importantly, the late lodgement do not apply only to income tax returns but to virtually all other federal tax return lodgements. These apply therefore to:-

1.        Income tax Returns

2.        GST Returns

3.        PAYG Instalment Amount Lodgements.

4.        PAYG Withholding Amount Lodgements.

5.        FBT Instalment Amount Lodgements.

6.        FBT return Lodgements

7.        Wine Equalisation Tax Lodgements

8.        Luxury Car Tax Lodgements

In Addition they apply to each individual lodgement requirement. For example BAS may include lodgement information for items 2, 3, 4, 5, 7, and 8 above. Although, only one BAS can be lodged, technically six different lodgements may occur. If a large entity has tax obligations for all of the above lodges BAS 113 days late, a penalty of $16,000 can be imposed or 6 times $2,750.

What is my classification?

There are three threshhold tests to determine the size of an entity and apply to both businesses and individuals. Satisfy any one of these thresholds places the entity in the relevant classification.

A medium entity is an entity that:

	has between $25,000 and $1 million in PAYG withholdings per year;
	has assessable income of more than $1 million but less than $20 million; or
	has a current annual turnover for GST purposes of more than $1 million but less than $20 million.

A large entity

	has over $1 million in PAYG withholdings per year;
	has assessable income of $20 million; or
	has a current annual turnover for GST purposes of $20 million or more.

A small entity is an entity that is not a medium or a large entity. 

The new penalty regime is no longer connected with your income tax liability. Previously, late lodgement of corporate income tax returns with no tax payable resulted in a penalty of $10 per week to a maximum of $2,750 even if there is no tax payable.

Lodgement Programmes and Lodgement Dates

Various returns have different lodgement dates and quite often further extensions are granted when the return is lodged by Bell & Bell as your agent. If you complete and lodge your own BAS or IAS return, you will not be eligible for an extended tax agent agent lodgement date for these, even though we lodge your income tax return.

Where we act as your tax agent, we will advise you of the date of required lodgement. It is imperative that you send in the necessary information required to complete your return well in advance of the lodgement date, so that we have sufficient to complete your income tax returns and lodge them in time to avoid the imposition of penalties.

Please note that the Tax Office is currently altering all of the lodgement programmes of tax agents and the approach is likely to be significantly different to prior years. This may mean that you cannot use last years lodgement date as a guide to this year.

 If you have any questions in relation to to the above please contact us on (03) 95096633