What Happens If You Fail to Lodge A Tax Return On Time?

Regardless of whether you are a small business owner or a big enterprise owner, if you lodge a tax return after the due date, then you may get into trouble. The ATO has stringent rules and regulations and everyone has to follow all those rules. If someone tries to break those rules, then they may have to pay fines or penalties. 

In the case of the taxation process, if you are filing a tax return late or forget to lodge a tax return due to any reason, then the ATO (Australian Taxation Office) will issue a failure to lodge (FTL) notice. If you are managing a company’s tax returns on your own, then it might become difficult for you to manage everything on your own when your business starts growing. Thus, it would be better to hire accounting services for businesses. Keep reading this blog to know why you may receive FTL notice and what can be done at a later stage.

What is Failure to Lodge (FTL) Notice?

A failure to lodge is a notice issued by the Australian taxation office (ATO) to those who are required to file a tax return, report or statement by a specific date but fail to do so. Australians who fail to lodge their tax returns on time could face this issue. However, every time you don't need to pay fines or penalties because of late lodgment of the tax return. Generally, the ATO consider personal circumstances before deciding on issuing FTL or taking further action.

On the other hand, if you have a professional tax accountant, then you can be sure that your company’s tax returns will be paid on time, and you don’t need to worry about it. For this reason, many business owners and individuals opt for accounting services in Melbourne so they can avoid paying unnecessary amounts on taxes.

Why Would You Receive a Failure to Lodge Notice?

If your tax return has not been filed on the agreed date to the ATO, you will receive a warning, and the warning can be either in writing or on the phone to notify you that you haven’t lodged your tax return. FTL penalties can be applied to the lodgments written below:

• FBT returns

• Tax returns

• Penalty for not lodging activity statement on time

• Single touch payroll reports

• Taxable payment annual reports

• Annual GST returns

Additional manual penalties or fines can be applied if taxpayers ignore requests for lodgment. To avoid paying these types of penalties, you should pay taxes on time, or you can hire accounting solutions for your company near your area by searching ‘accounting services near me.’

How is FTL Penalty Calculated?

FTL penalties can vary, and it will depend on the size of the entity and the length of time that has passed after the due date for lodgment.

• Small Entities

At the rate of a single penalty unit, FTL penalties are calculated for each 28-day period that the tax return is overdue. The penalty can be applied up to 5 penalty units.

• Medium Entities

For medium entities, the penalty unit which is applied to small entities is multiplied by 2. Medium entities are considered medium withholders for PAYG, which have assessable income or GST turnover of more than $1 million, but it would be less than $20 million.

• Large Entities

In the case of large entities, the penalty unit is multiplied by 5. A large entity is defined as a large withholder for PAYG, which has assessable income or GST turnover of $20 million or more.

• Significant Entities

For significant entities, penalties are multiplied by 500. Such penalties have applied on or after 1 July 2017 to significant entities that have failed to lodge approved forms on a specified date.

If you have already prepared financial transaction records, then it will be easy for accountants to lodge a tax return on time. For this purpose, you should take help from the Melbourne bookkeeper to record all financial transactions so they can give those records to the accountant for taxation process.

Can You Ask for a Remission for FTL Penalties?

A taxpayer can reduce or avoid penalties by requesting FTL penalty remission. Remissions are of two types:

• In full

• In part, if there are exceptional or extenuating circumstances – for instance, if you fail to lodge a tax return on time because of a natural disaster or serious illness.

Once taxpayers’ outstanding statements or returns have been lodged, they can request FTL remission. The ATO can reduce or remit the penalty based on individual circumstances. The best method to avoid paying penalties is by lodging tax returns on time and if you don’t have time, then you can opt for accounting services where your accountant will do it for you.

Conclusion

The blog shares information on failure to lodge notice and what can be done if you receive this type of notice from the ATO. For further detail regarding this, you can also contact Reliable Melbourne Accountants.

What do You Need to Know about PAYG Instalments?

When it comes to different types of taxes that every business owner must know, then many business owners consider Pay As You Go (PAYG) tax instalments self-explanatory. However, there are some important points that you need to consider as a business owner, especially if you are new to the system. If you are a startup business owner, then it might seem difficult for you to manage PAYG tax instalments, but you don’t need to worry about them if you have a reliable tax accountant. If you don’t have one yet, then you can look for a professional tax agent Melbourne.

The ATO has different methods that taxpayers use to pay their annual taxes. Generally, the PAYG scheme was introduced to create tax instalments on regular basis for individuals that meet specific criteria. As a result, it can be considered controlled and manageable tax payments. To know more about PAYG instalments, keep reading this blog:

What are Pay As You Go (PAYG) Instalments?

PAYG instalments are referred to as payments that you make on taxes for business and investment income. In simple words, if you are running a business or investing and making above the annual income threshold, then you need to opt for PAYG instalments. To keep a healthy cash flow, it is important to plan ahead for the end of the financial year. In this situation, PAYG instalments can help you. You can also ask a tax agent about PAYG instalments if you are unaware of them. For this, you can also search for ‘tax agent near me’ to find a tax agent near your location to lodge your tax returns.

How do PAYG Instalments Work?

Generally, you need to pay PAYG instalments once every 3 months. The amount that you need to pay will be based on your investment and business income. As a result, you can avoid large tax bills after you file your income tax return. If you pay PAYG instalments even then, you have to file an annual income tax return. You can plan ahead, manage your cash flow, and budget for tax costs.

Usually, PAYG instalments are made during the year to evaluate and check whether the company owes more tax or is due for a tax refund. The sum of tax liability is calculated when the yearly income tax return is determined at the end of the financial year. The ATO will notify companies and people who have to pay PAYG instalments. If you have an experienced tax agent, then they can keep you updated regarding this. However, if you haven’t hired one, then you can search for the best tax agent Melbourne.

PAYG Withholding vs. PAYG Instalments

Basically, there are two kinds of PAYG tax payment methods – PAYG withholding and PAYG Instalments. You need to understand the basic difference between PAYG instalments and PAYG withholding for tax purposes.

• PAYG Instalments or PAYG – I: in this type of tax payment, an employer is responsible for withholding an employee’s tax and pays the tax on the behalf of the contractor or employee to the Australian Tax Office.

• PAYG Withholding or PAYG – W: in this type of tax payment, a business owner or sole trader makes payments once every 3 months to the ATO and this payment will be based on their investment or business income.

You can also search for an online tax agent Melbourne to get details about tax returns, PAYG instalments, PAYG withholding, etc. You can also take help from them to know how you can pay PAYG instalments.

How to PAYG Instalments?

There are two methods that you can use to pay the PAYG instalments:

• Automatic Entry

If you surpass an income threshold, then you will be automatically liable to PAYG instalments. The ATO will notify you that you have been enrolled in PAYG. They will also notify you about how much you have to pay and the date when you have to file your tax returns.

• Voluntary Entry

You will be liable to voluntary entry when you sign up for PAYG before you get enrolled for the PAYG by the ATO automatically. The individual can plan and enroll in the PAYG instalments before they meet the ATO thresholds. Voluntary entry is relevant for firms or sole traders who got a huge profit or are new to the business.

Before you pay any type of tax, it is important to have an accurate financial transaction record, and the Melbourne bookkeeper can better do it for you. These records are used by tax accountants to prepare and lodge a tax return.

Conclusion

The blog is all about PAYG instalments and now, you may have an idea about what exactly PAYG instalments are and how they can benefit you. Moreover, for more details, you can also contact Reliable Melbourne Accountants.