The responsibilities associated with successfully running a business have never been more extensive or stringent than today. One area which is often put to the ‘back of the pack’ for most is their Business Activity Statement (BAS) and Taxation obligations. However, the ATO do not subscribe to this notion and have prioritised increasing their effectiveness at regulating these lodgements. They have frequently enhanced their penalty system under the Crimes Amendment (Penalty Unit) Bill and from December 2012 these units have increased astronomically by 91%. Therefore, it is more important than ever to make sure you have all your BAS reporting and Tax affairs in order. However, if you have submitted a late BAS statement, here’s what to do.
ATO DUE DATES
Income Tax Returns
The 2017 financial year income tax returns prepared by tax agents are due for lodgement by 15 May 2018. There is also a concessional lodgement date of 5 June 2018 extended to entities in non-taxable or credit assessment positions. However, an exception to this are entities who have previously lodged tax returns late and are required to lodge by 31 October 2017; or entities whose previous year taxation assessment resulted in a tax payable amount exceeding $20,000 (this excludes companies) and have a 31 March 2018 lodgement date.
Business Activity Statements (BAS’s)
Quarterly BAS’s are due for lodgement the 28th day following the respective BAS period (e.g. March 2018 Quarter BAS’s are due 28 April 2018). However, if lodged through a BAS agent you will be granted an extended due date of the 25th day two months following the respective BAS period (e.g. March 2018 Quarter BAS’s are due 26 May 2018). Businesses lodging Monthly BAS’s have a due date of 21st day following the BAS period and do not receive the extended due date concessions afforded to Quarterly lodgers. If you are currently lodging BAS’s on a monthly-basis and wish to change to quarterly reporting for the convenience and extended lodgement periods, you must have sales turnover less than 20 million and contact the ATO to make the switch as long as they haven’t previously determined you must lodge monthly for other reasons.
PENALTIES AND GENERAL INTEREST CHARGES
If any of the above mentioned due dates are breached, you may be subject to the ATO’s penalty system for which they issue Penalty Units (currently $210 per unit) depending on the infraction and period outstanding. ‘Failure to lodge’ penalties are calculated based on the size of the entity and each 28-day period the tax return or BAS statement is overdue. ‘Small Entities’ which have a turnover of less than 1 million are issued one penalty unit per period overdue which is capped at a maximum of five penalty units being $1,050. ‘Medium Entities’ which have a turnover of 1 million and below $20 million or have PAYG withheld amounts totalling between $25,001 and 1 million in a previous year (medium withholders) are issued two penalty units per periods overdue. ‘Large Entities’ with a turnover of 20 million and above or PAYG withheld amounts totalling 1 million in a previous year (large withholders) are issued five penalty units per periods overdue. In addition to this the ATO applies a general interest charge (GIC) for any unpaid tax liability or BAS statements from the date it was due to be paid until which time the amount in question is settled (including the associated penalties and interest charges).
YOU’RE LATE – WHAT TO DO NOW?
The ATO generally does not apply penalties in isolated cases of late lodgement where an entity has maintained a good lodgement history. Also, if you were subject to extenuating circumstances impacting your ability to lodge (i.e. natural disaster or serious illness) you can apply to have the penalty and interest charges remitted. If neither of the above applies then you will need to lodge and pay your Income Tax Return or BAS Statement (including any penalty and interest) as quickly as possible. If you are unable to make immediate payment then it is in your best interests to enter into a payment arrangement with the ATO which can avoid or reduce your penalty consequences, however general interest charges will still be applied.
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