Australian Taxation Office fines for late filing of annual returns and GST payments set to increase

The Tax Institute’s managing director of tax policy and advocacy, Scott Treatt, said practitioners and their clients should pay close attention to filing deadlines as fines are increasing by more than 35%.

In line with inflation, the increase comes amid rising costs of living and pressure on Australian households.

“The high inflation environment of the past three years means that the indexation provided by law could increase late filing penalties by more than 35% from the current level, to more than $300 per penalty unit.

“This is a significant increase, which will take effect from July 1, 2023, just six months after this latest increase.”

For tax purposes, penalty units are used for fines when taxpayers do not provide the required data. Automated failure to file penalties may be applied to late filed returns, reports and statements.

“In some cases, such as criminal activity and willful avoidance of tax liability, severe penalties may be appropriate,” Treatt said.

“For taxpayers who simply file a little late, it’s a significant cost. The Commissioner retains and exercises the power to waive sanctions in certain cases.

“For taxpayers, this means understanding their rights and the process for appealing a penalty. For those without a tax agent, this can be very tricky.

“We are warning taxpayers and tax experts; they must be more vigilant in updating their tax obligations to avoid the risk of these increased penalties.

Avoidance, extensive compliance repression

The budget also included a new crackdown on tax avoidance through working Australianssmall businesses and multinationals, are expected to generate $4.7 billion in additional revenue over four years.

Dr. Chalmers expanded successful ATO compliance programs, including the Tax Avoidance and Underground Economy Task Forces, as well as the Personal Income Tax Compliance Program.

Accountants and tax agents deemed “high risk” due to questionable past behavior will also come under increased scrutiny as the Tax Practitioners Board is tasked with additional compliance activities. Poor quality or illegal advice will be targeted.

Tax Commissioner Chris Jordan said this month that Australians owed $45billion to the taxman, after a nearly 70 per cent explosion in Unpaid taxes during the COVID-19 crisis.

Uncollected and uncontested tax debt rose from $26.5 billion in mid-2019 to $44.8 billion on June 30 this year, after widespread economic disruption due to the pandemic and leniency granted to taxpayers in trouble by the ATO.

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