Tax deadline that could cost you $850
A tax expert has warned it's "inevitable" that a looming deadline will end up hurting taxpayers' wallets as the coronavirus crisis rages on.
While the final deadline to lodge your tax return is generally October 31, there is a loophole - taxpayers who lodge through a tax agent instead of going it alone can take advantage of concessional extended deadlines that allow their agent to lodge a form on their behalf up to May 15 the following year without incurring any penalty.
The Australian Taxation Office already pushed back that final cut off date to June 5 this year because of the chaos and uncertainty caused by the pandemic.
Now, the ATO has extended the lodgement date for all 2018-19 income tax returns for individuals, companies, partnerships and trusts once again, to June 30, 2020.
However, that still might not be enough to save you from a hefty penalty.
According to Ben Johnston from leading Sydney accounting firm Willett Johnston Partners, overworked tax professionals have recently been grappling with the triple whammy of helping clients with the JobKeeper subsidy while the due dates for lodging and paying Business Activity Statements and filing last year's tax returns fast approached.
He said that unforeseen workload had caused a "bottleneck" and made it harder for agents to meet those key deadlines, and that the personal pressures suddenly facing many clients had also caused further delays.
"We've been hammered in all directions in terms of what is due within a one-month period," he explained.
"Accountants have had to nurse clients through the JobKeeper process and even some of the clients themselves have been finding it difficult to get all the information together because they've been focused on job preservation and getting their own life in order, so some clients haven't been as forthcoming as they usually would because of everything else going on.
"People are worried about how to reinvigorate their businesses to make money and they're distracted by the first true recession we've had in quite a long while, so that's pushed some compliance responses to the side while they concentrate on survival."
Mr Johnston said the repercussions of late lodgement would be "significant" for taxpayers, as they face copping a $850 late lodgement penalty.
And in an added blow, he said if you don't lodge last year's return by the end of the financial year, you could also miss out on the Family Tax Benefit entitlement.
Mr Johnston praised the ATO for its flexibility in extending the deadline and said it would "alleviate a lot of the pressure" facing the industry - but warned there was a "real risk" many taxpayers would still fall foul of the tax man this year.
"Without a doubt people will miss this deadline," he said.
He also warned there was no guarantee individual taxpayers would be granted the extension.
"When you are late in lodging, that extension can be taken away - it's not a given," he warned.
"Ordinarily, tax returns are due on October 31 but if you're lodging through an agent, you generally get a longer period - but it is subject to your lodgement history.
"If you are perpetually late, that extension can be taken away and that's another reason to lodge early."
Mr Johnston urged taxpayers to be "responsive" when agents requested information from them to avoid late penalties and said agents were still under pressure even with the new deadline.
"The problem is the work is building up at the back end, and then straight away we move into the next financial year, so there's a real risk of a bottleneck," he said.
"We're expecting it to get really busy really quickly because people will want to get their refunds."
An ATO spokesman told news.com.au it was working with professionals during the unprecedented coronavirus crisis.
"As the COVID-19 pandemic continues to affect the community, we are committed to taking steps to ease the burden on tax professionals by providing flexibility and support in recognition of the pressures facing the tax profession," the spokesman said.
"We have been working with practitioners, listened to their concerns and we are focused on doing as much as we can to ease the burden on them."
The spokesman said the ATO "will be working pragmatically and flexibly to ensure we provide the right support to the tax profession" and that "no late lodgement penalty will be imposed" as long as returns are lodged by June 30.
Originally published as Tax deadline that could cost you $850