What to do if you file your business tax return late
Sadly, unlike when you were at school, it is not actually possible to say the dog ate your homework and beg forgiveness. As the saying goes, there are only two things in life that are certain, death and taxes. Here are some tips on what to do if you’re late with your tax.
Neglecting your taxes can be expensive
The main reason for getting your tax return done on time: lodging late can be expensive.
The Australian Taxation Office (ATO) charges a late tax return penalty called a ‘Failure to Lodge’ penalty, which for small businesses with assessable income less than $1 million can range from $180 if 28 days late or less, to $900 if more than 112 days late. For medium-sized businesses earning more than $1 million in assessable income per annum, these penalties double.
These penalties can apply even if your business is entitled to a tax refund. However, if your business owes money to the ATO, you can also be charged with an interest penalty called a ‘General Interest Charge’. This will cost your business 9.01 per cent from the payment due date until full payment.
Fortunately, the ATO is often flexible with tax returns filed just a few days late and will not apply the penalty, and will also account for postal delays.
Pay any tax owing as soon as possible
If you have not yet lodged your return, but think you will likely owe money to the ATO, you can still make that payment prior to lodging. Payments to the ATO are usually due either at the same time, or shortly after, the lodgement date, so the longer you put it off, the more expensive the interest penalties become.
If you are still unsure how much you may owe, or are financially unable to make the payments on time, you should contact the ATO to discuss your options as soon as possible.
The ATO gives individuals and businesses extensions on their lodgement deadlines if they use registered tax or BAS agents, to acknowledge that these accountants are often swamped with work at tax time.
Provided you do not hand them your paperwork on the last day to do taxes, you may also apply for an ATO exemption known as the ‘safe harbour exemption’. This means that if your return is lodged date because of the actions of the tax agent, your business is exempt from any failure to lodge penalties.
Alternatively, even without a tax agent the ATO may grant deadlines to businesses if you contact them directly.
Filing a late tax return can prove costly, but you should not put off dealing with the issue – contact the ATO and arrange payment instead of ignoring the deadline and hoping for the best.
If you do need some cash to cover an urgent tax payment, talk to online lender Prospa about a small business finance solution.
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