Is 31 October making you feel uneasy? No, we’re not talking about Halloween; we’re referring to the date your personal tax return is due.
If you are, don’t worry, you’re not alone. The prospect of filling in the forms is never a fun one. However, if you’re worried that you won’t be able to pay your taxes this year due to a loss of income or unforeseen circumstances, you’re probably feeling even more anxious.
If this is your situation, the worst thing you can do is ignore the personal tax return date and hope your obligations go away. Trust us, they won’t.
If you’re an income-earning Australian citizen, you’re generally required to lodge a tax return – but there are some financial-related exemptions.
If circumstances mean you didn’t work during the 2022-2023 tax year, you didn’t receive any compensation, or your earnings are currently lower than the tax-free threshold of $18,200, you may be exempt.
However, even if you don’t need to lodge, you still need to complete a non-lodgement advice form to let the ATO know that you’re exempt.
If you’re required to lodge a tax return, make sure you do, even if you don’t have the means to pay right now. If the ATO doesn’t receive your return by 31 October, they can issue you with a failure to lodge (FTL) penalty after sending reminders.
An FTL penalty is calculated at a rate of one penalty unit (set at $275 for the 2022-2023 tax year) for each period of 28 days that your return or statement is overdue, up to a maximum of five penalty units. These additional amounts will only add to your money struggles and stress.
While not very common, in some cases, you can even get prosecuted for a failure to lodge your return, with a maximum penalty of $9,000 or even prison time.
The time-consuming task of lodging a tax return is now a whole lot easier since the process has moved online to MyTax.
Many of the sections you need to complete, including income, investments, government payments and deductions, will already be pre-filled for you by information provided to the ATO by your employers, bank and other agencies.
Before you complete and lodge your personal tax return, myTax will provide an estimate and breakdown of your refund or tax owing.
Importantly, this is only an estimate and the final balance may differ if complex calculations are involved or further information is received. If you owe more than you are in a position to afford right now, don’t panic, there are ways to deal with it.
In fact, the tax man, aka the ATO, can be very reasonable when it comes to repaying your taxes, as long as you’re honest and lodge correctly. For example, you may be able to set up a payment plan allowing you to pay what you owe in smaller instalments.
If you owe less than $100,000, you can easily set up a payment plan online. But, just be wary that if you do go down the payment plan route, be sure to carefully consider how much you can afford to pay for each instalment, including any interest you may accrue on overdue amounts.
If you don’t pay the amounts you owe on time or set up a payment plan, the ATO will charge you interest on your unpaid amounts. This interest can then build, putting you in an even more difficult financial position.
Essentially, our best advice to keep the tax man happy is to keep them updated by lodging your tax return by 31 October, even if paying what you owe may seem impossible right now. They will appreciate being kept in the loop.
In an ideal world, you’d have money sat in an account ready to pay your tax each year. But, unfortunately, we don’t live in an ideal world, especially with the pandemic still affecting every day.
So give yourself a break and, instead of worrying, take control and let Halloween be the only scary thing about 31 October this year.
Are you experiencing financial difficulties right now? Reach out to our team of friendly team of financial specialists on 1800 534 534. They can help you take back control of your cash, so tax return time is never a scary time.