Many people do not realise that it is a legal requirement to lodge an Australian Income Tax Return if they receive any taxable income in Australia.
For most people living out of Australia, this would only be rental property income as overseas income would usually be non taxable.
It is a common myth that if your expenses are greater than your income (such as interest costs) that you do not need to lodge a return. This is not true.
Even if you have just A$1 of rental income you are required to lodge a tax return and report this, even if you have more expenses than income.
For many years the Australian Taxation Office (ATO) did not have the resources to adequately police this and many non lodging taxpayers were not contacted so they felt they had no reason to lodge. In fact it was general policy in the past that if no tax was payable then no fine would be imposed.
This changed in financial year 2000 where the ATO changed the rules to allow them to fine a taxpayer for not lodging a return even where there was no tax payable. Until recently we have not seem them act on this ability, however with more staff available and a recent upgrade in their computer systems, chasing up non lodgers is now a priority task.
If you did receive any Australian sourced income prior to June 30th then you must lodge a return declaring the income and claiming any expenses by 31st October if you do it yourself, or if you engage a Tax Agent such as ourselves, then you have an extended period until April the following year.
Even if you did not receive any Australian income but in past have lodged Australian Tax Returns, then it is prudent to advise the ATO that a return is not necessary so they do not send you any penalty notices or demands.
If you don’t then a fine of up to A$550 per person, per year outstanding may be imposed.
If you have been charged a late lodgement fine, then it is possible to have it remitted in part or full by making a request to the ATO. They are generally quite lenient, however you will need to explain why the return is late and also promise to lodge promptly in the future.
There is no guarantee that they will reduce the penalty, but form our experience they are reasonable in this regard at least for now, however we do expect them to be tougher on this in the future.
You should note that they will not reduce any penalties until the required Tax Returns have been completed and lodged. If there is tax payable, then there may also be late payment penalties that need to be considered.
Attending to your tax return lodgement is not a complicated matter so should not be feared nor put off too long.
If you have outstanding tax returns then it is sensible to contact either the ATO or an Australian Registered Tax Agent like us, to discuss your situation and let them know when the returns will be lodged. This will ensure that you can keep up to date with your requirements and hopefully have a minimum of penalties imposed.
