Tax season is drawing to a close, friends. This means that your deadline for lodging your tax return is fast approaching. If you’re like a lot of people and have been putting off finishing your tax return, or plain forgot until now, consider this your guide to getting through the process on time.
Mark Chapman, Director of Tax Communications at H&R Block, walked us through all the key details about tax return deadlines from dates to potential penalties. Check out what he had to say below.
When exactly is the tax return cut off date in 2021?
Don’t panic just yet. You still have some time under your belt, but deadlines are looming.
Chapman shared over email that “Tax law says that the latest date for self-lodgers to get their tax returns in to the ATO is 31st October 2021. If you lodge after that date, you run the risk of incurring a late lodgement penalty. This year, 31st October is a Sunday so the ATO will concessionally allow individuals until close of business on Monday 1st November to lodge”.
Pop that date into your calendars, friends.
Additionally, he shared that “for businesses, the Quarter 1 BAS due date is coming up on the 28th October 2021”.
What happens if you miss said cut off date?
Imposing deadlines is always a stressful business, but what tends to happen if you miss the cut off date to lodge your tax return is not always clear cut. There are different possible outcomes depending on a few details. Though, yes, penalties are absolutely on the cards.
“Self-lodgers who fail to lodge a tax return by 31 October could be hit with an immediate late lodgement penalty of $222, increasing by a further $222 for each successive 28 day period that the return remains outstanding, up to a maximum of $1110,” Chapman stressed.
“If you still fail to lodge once the maximum penalty is reached, the ATO can issue you with a default assessment (in effect, an estimate of what the ATO thinks your income is) or they can prosecute you.”
He did point out here, however, that it’s worth noting “the ATO won’t generally impose a penalty if you are due a refund of tax”.
On the business end of things, fines are very much a possibility, too. Chapman explained, “Businesses who don’t get their BAS in on time also face a failure to lodge penalty which is line with the penalty for not lodging a tax return ($222 for each period of 28 days (or part thereof) that the return or statement is overdue, up to a maximum of $1110)”.
How to get your tax return out the door
Okay, so you want to lodge your tax return as painlessly as possible. What’s the best way to do that?
On this, Chapman explained that it’s probably worth enlisting the advice of a tax agent if you find you’re overwhelmed by the amount of work involved in personally filing your return. A professional can not only offer sound tax advice and help iron out the process, but it takes the pressure of a time limit off you.
“Taxpayers who use a tax agent can usually lodge well beyond that deadline without penalty. The ATO gives tax agents concessional extended deadlines which mean that they can lodge returns on behalf of clients up to 15 May 2022 without incurring any penalty,” Champman explained.
If you’re not sure if an accountant is the best move for you, he shared that generally speaking, “If you are entitled (or believe you are entitled) to claim deductions, either for your business or as part of your job, it makes sense to get an expert to prepare your return in order to ensure that you claim all the deductions you are entitled to”.
In addition to that, if you just feel as though you have no hope of making the October deadline, using a tax agent is probably something worth considering, too. Be aware, however, that “You must be registered with the agent by 31 October in order to benefit from the extended deadline”.
Similarly, with business owners, he stressed that his “advice is don’t bury your head in the sand in the run-up to the BAS deadline. Keep your books and records up to date and the BAS process will be straightforward and you’ll have the necessary oversight of the financial side of your business”.
“Don’t neglect your bookkeeping.”
You can read more about tax time 2021 and the due dates associated with that on the ATO website here.