If you run a business, it may feel difficult to stay on top of all your business tax return lodgments throughout the year. It’s likely you may need to regularly file:
- Activity Statements (monthly, quarterly or annually)
- Fringe Benefits Tax return annually if you have employees you provide benefits to
- GST returns (monthly, quarterly or annually)
- Payroll tax returns (monthly)
- Superannuation guarantee filings
Often businesses file their tax return late
Often businesses will be late in lodging their business tax filings for a variety of valid reasons. Businesses often may not have the right information to complete the tax returns accurately or sufficient staff with the right knowledge and skills to complete the tax returns.
The ATO has a full list of lodgment due dates for the different types of returns and filings.
If you lodge your returns late, the ATO may levy a late lodgment penalty, which can vary from $180 to $900 for small businesses. In addition, where a tax liability is paid late, the ATO may charge a penalty rate of interest from the due date of payment until the tax liability is paid. The July 2017 penalty interest rate is 9.01%.
While it’s not ideal to lodge your business tax returns late, here are some tips that may help minimise any interest or penalties for late lodgment.
Make a payment for any outstanding tax liability as soon as it’s due
If you are required to pay an amount of tax for the tax return that you need to lodge, you can make a tax payment prior to lodging the tax return. Tax payments are often due either at the time the tax return is due or within a short time of that due date.
The ATO is able to charge interest on any late payment of income tax liabilities if the payment is made late. As such, to minimise any interest on late payment, you can make the tax payment before you lodge your tax return. If you don’t have all the information available to accurately determine how much your tax liability would be, you could make a payment based on your best estimate.
If you can’t make your tax payments on time, you can contact the ATO to arrange a payment plan to help meet your tax obligations.
Enlist the help of a tax agent to obtain an extension for due dates
The ATO recognises that registered tax agents and BAS agents (registered agents) play an important role in meeting tax and superannuation lodgment obligations of taxpayers. For this reason, the ATO has a registered agents’ lodgment program which provides extensions in due dates for various lodgment obligations.
This is broadly to assist with a registered agents’ workload. For example, income tax returns for individuals, partnerships and trusts have a due date of 15 May (for the prior 30 June year end). However, when you lodge your return through a tax agent, an extension to the lodgment due date is provided to 5 June.
Therefore, if you lodge your tax returns through a registered agent, you will also be entitled to the extended lodgment due dates.
The ATO also provides additional protection where you lodge through a registered agent through the safe harbour exemption. The safe harbour exemption can apply to cancel any late lodgment penalties if you used a registered agent if the documents were lodged late because of the actions of the registered agent.
You can request that the safe harbour exemption be applied to cancel the late lodgment penalty, if you can prove that you gave all the relevant information to the agent in time for the document to be lodged by the due date.
Registered agents can offer a variety of services and can tailor their service offering to meet your needs, so you may wish to engage a registered agent and consider the services they might offer.
Request an extension of due date from the ATO directly
If you choose not to engage a tax agent to assist with your tax lodgments, you can contact the ATO directly to request an extension to the due date for lodgment. You should seek to contact the ATO as soon as you anticipate the tax returns are going to be late, ideally before the due date of the documents.
The ATO can be phoned on 13 28 66 during business hours.
Here is another relevant article for Small Business Tax that we recommend: 5 Steps to Get You Through Your Business Tax This EOFY