May 22, 2014

ATO Crackdown on lack of compliance

You may have been informed recently that the ATO has signalled it is no longer prepared to support struggling businesses through financing business operations via unpaid tax and superannuation obligations. Further to this, the ATO is now targeting individuals who have been late in lodging their tax returns through harsher penalties against non compliance with tax laws. The ATO has sent around 70,000 letters to taxpayers, asking them to get up to date with their tax returns. This campaign to level the tax playing field is an effort to recover approximately $70 million of late lodgements.

Consequences for not lodging tax returns

Taxpayers have a range of obligations under the Taxation Administration Act 1953 (TAA) that, if not met, are considered criminal offences. For those who fail to lodge their returns and remain in breach of the law, the courts can impose community service orders, fines or additional penalties or even prison sentences.

Advice for your clients – Individuals

If any of your clients receive one of these letters, or have any outstanding tax returns, they should arrange to prepare and pay their tax returns via a registered tax agent.
Along with harsher penalties for individuals, the ATO crackdown also applies to businesses who fail to lodge activity statements and returns.

Consequences for not lodging activity statements and returns

If your clients are late in lodging their returns or activity statements, they will incur penalties and be charged interest on any unpaid amounts. Once a Company has received an ATO compliance notice and still fails to lodge their returns, they could face the following repercussions:

  • An audit and face further investigation from the ATO
  • The ATO may estimate their net assessable amount or taxable income, and the tax they owe without further warning
  • A business or individual could be referred for prosecution without further warning
  • If prosecuted and convicted, an individual could be fined up to $8,500 or imprisoned for up to 12 months, for a company, the maximum fine is $42,500.

Advice for your clients – Businesses

Your clients should:

  • Ensure any outstanding BAS and PAYG returns are lodged as soon as possible
  • Pay all PAYG and superannuation charge amounts within the relevant time frames
  • Keep all BAS and PAYG returns up to date and lodged within 3 months of the due date.

If any of your clients have overdue BAS and / or PAYG returns and / or overdue PAYG and superannuation charge payments, contact SV Partners on 1800 246 801 for specialist advice on the options available to deal with issues arising from this legislation.

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