If you run a business, you may find it challenging to stay up to date on your tax return lodgments each year. Between growing your business, hiring employees, and dealing with investors, it’s easy to forget about the administrative responsibilities that come with owning a business in Australia.
In this article, we’ll review everything you need to know about tax deadlines. We’ll cover when the Australian tax return due dates are and what you can do if you need to file a late tax return. Although you never want to miss key dates, we have you covered in the off-chance that it happens.
Is missing a tax date common?
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 may lack sufficient staff with the right knowledge and skills to complete the tax returns.
Late tax payments are more common than you think, with Australians coming up with some creative excuses for not filing on time. Excuses have ranged from, ‘A mouse ate my receipts’ to ‘I’ve never heard of a tax return’.
Unfortunately, these are not valid reasons to lodge behind schedule. Even if late lodgments are common for business and individual tax returns, it’s your responsibility as a business owner to make sure you submit your returns on time each financial year. Doing so ensures that you:
- Remain compliant with the Australian government
- Receive tax refunds if you’re eligible
- Avoid having to pay penalties and fees
Let’s take a closer look at the due dates for tax returns.
What are tax return due dates?
The deadline to file your tax returns depends on a couple of factors. The Australian Tax Office (ATO) has a full list of lodgment due dates for the different types of returns and filings for small business owners to ensure you pay on time each tax year. The due dates vary based on the type of business structure you choose.
Remember that you are responsible for filing a return, even if you believe that you do not have any tax due.
If you’re a sole trader — meaning that you’re working for yourself or are a self-employed individual in business — navigating the tax system is a bit easier. You can declare your business income when filing your individual tax return. The tax return due date is October 31 if you file yourself.
If you choose to lodge through a registered tax agent, you’ll likely receive a filing extension. Tax agents are often granted extensions and have their own unique lodgment schedule, allowing them to file tax returns later than the standard October 31 deadline.
However, you cannot contact a tax agent after the October 31 deadline and expect to receive preferential treatment. If you are using a tax agent for the first time or are switching agents, make sure you contact them before October 31.
If you’re a member of a partnership, filing your tax return is about as straightforward as it is with a sole tradership. You’ll need to declare your share of the partnership income when filing your individual income tax return. Each partner must pay his or her share of the net partnership income received.
Furthermore, partnerships are also required to file a business tax return with the Australian Taxation Office annually. The deadline for both your personal returns and the business returns is October 31. As is the case with a sole partnership, you can receive an extension on this deadline if you file through a registered tax agent.
Anyone filing a business tax return will want to consider securing an Australian Business Number (ABN) to help streamline the process.
If you’re part of a trust, you’re required to declare any trust distribution that you receive on your individual tax return. Furthermore, as is the case with partnerships, the trust itself will need to file a trust return. The due dates for both are October 31. Again, the same applies — work with a registered tax agent, and you’ll likely receive a filing extension.
The last type of business structure that you may fall under is a company. As the owner of a company, you’re required to declare any wages or salary that you receive on your individual tax return. This can include everything from dividend income to director’s fees. The deadline for this individual return is October 31, although the registered tax agent stipulation applies.
The company is also required to submit a tax return. Unlike other business formations, the deadline for the company tax return is different. The due date for a company’s tax return is February 28 of the following year. So, for the fiscal year that ends in 2020, companies would need to file tax returns by February 28, 2021. Companies are also eligible for the registered agent extension.
The ATO defines a few exceptions that tend to come up when filing taxes. The first exception is if the tax due date falls on a:
- Public holiday
If this is the case, both individuals and businesses can lodge and pay on the next business day following the closure. So, if the tax return due date falls on a Sunday, you’re required to lodge the next Monday. You will not incur a general interest charge or penalty under these circumstances, so long as you file by the first business day.
One of the other stipulations for the above dates is that they apply to businesses with a fiscal year ending on June 30. This is the common fiscal year close for most Australian businesses, but it’s not always the norm.
If you use the substituted accounting business for your company’s accounting practices, you’ll want to contact the ATO or a registered tax agent to find out more about when your returns are due.
What happens if you file a late tax return?
If you lodge your returns late, the ATO may levy a late lodgment penalty, which can vary from $180 to $900 for small businesses. Also, where a tax liability is paid late, the ATO may charge a penalty rate of interest from the due date of payment until you pay the unpaid tax liability. The penalty interest rate is 9.01%.
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. 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. You can phone the ATO at 13 28 66 during business hours.
Another important thing to note is that the penalties are worse if you don’t lodge on time. There’s a difference between lodging and not being able to pay the tax compared to not lodging at all. The ATO recommends that you lodge on time even if you can’t pay.
If you know that you can’t pay on time, the ATO will work with you to set up a payment plan. The sooner you can get out ahead of this, the better luck you’ll have when dealing with the ATO.
Tips to avoid late tax returns
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.
Pay outstanding tax liability as soon as it’s due
If you’re required to pay an amount of tax for the tax return that you need to lodge, you can make a tax payment before 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 can charge interest on any late payment of income tax liabilities. 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.
Similarly, you should pay off outstanding tax returns from the prior year. Otherwise, your interest will continue to compound on last year’s tax return. Pay off your overdue return from the previous year and work with the ATO to set up a payment plan for the current year.
Enlist the help of a tax agent to obtain an extension for due dates
The ATO recognises that registered tax 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.
Remember, 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 when you lodge through a registered agent through the safe harbour exemption. The safe harbour exemption protects you against penalties if your registered agent lodges late.
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.
Beyond the safe harbour rules, registered agents can offer a variety of services and tailor their service offering to meet your needs.
Keep your financials in order
One of the reasons why business owners pay their taxes late is because they do not have their financials in order. They scramble to compile necessary financial activity statements, which causes them to miss deadlines. And, even if you do happen to lodge on time, you may miss out on valuable tax credits.
By using reliable accounting software, you’ll keep all your ducks in a row. You’ll have peace of mind knowing that your payment summaries, tax records, and other financial information are readily available. If you file on your own, you’ll find it much easier to do so, reducing the likelihood of missing a deadline. And if you utilise a registered agent, he or she will thank you for making their job that much easier (and likely not need to charge you for as many hours).
Staying proactive will help you meet tax deadlines
As an Australian small business owner, you’re responsible for meeting tax return deadlines. The ATO doesn’t have much patience if you file a late tax return without giving them a heads up. Using accounting software, working with a registered tax agent, and being proactive about lodgment deadlines are all things that you can do to ensure you meet deadlines on time.