Avoid a $1650 fine Millions at risk over common mistake
Millions of Australians are facing a looming tax deadline. The Australian Taxation Office (ATO) has issued a warning to more than two million taxpayers. They must file their income tax returns by October 31 to avoid penalties exceeding $1,650.
Tax Deadline Looms
As of now, over 8.7 million taxpayers have already submitted their returns. The ATO indicated that failing to meet the deadline will result in a Failure to Lodge (FTL) penalty.
Potential Penalties Explained
- The FTL penalty for individuals is based on penalty units.
- Each unit is valued at $330.
- The penalty increases by one unit for every 28 days that a return is overdue.
- The maximum penalty caps at five units, amounting to $1,650.
- Medium entities, those with an assessable income between $1 million and $20 million, face double these penalties.
Rob Thomson, an Assistant Commissioner at the ATO, advised against delaying tax return lodgements. He emphasized that doing so does not extend the timeframe for paying any tax due. Any tax bills must be settled by November 21 if a return is filed late.
Understanding Tax Deductions
Thomson highlighted three crucial rules for claiming work-related expenses:
- Expenses must be paid out of pocket and not reimbursed.
- They must directly relate to earning income.
- A valid record, typically a receipt, must be kept as proof.
Among those who have submitted their returns, more than 4.4 million did so through self-lodgement, while over 4.2 million utilized the services of registered tax agents. With the deadline fast approaching, taxpayers are urged to complete their returns promptly to avoid substantial financial penalties.
