Avoid ATO’S increased tax penalties - BUSY01 and First Class Accounts Ovens and Murray

Avoid ATO’S increased tax penalties

As the ATO directs its attention towards taxpayers grappling with unresolved tax lodgements and debts, it's crucial to understand how to steer clear of facing heightened penalty rates in the upcoming fiscal year of 2023–24. 

In this article, we explore strategies to help you manage your financial compliance and minimise the impact of these changes on your obligations.

Increased Scrutiny on High-Value Outstanding Debts

The ATO (Australian Taxation Office) has received increased funding to intensify its scrutiny on taxpayers with high-value outstanding debts and aged debts. If you're among the following categories, it's time to take note:

  • Public and multinational groups with an aggregate turnover surpassing $10 million.
  • Privately owned groups or individuals controlling a net wealth exceeding $5 million.

The goal is to ensure that outstanding debts over $100,000 and aged debts older than two years are properly addressed. 

Rising Penalty Rates: What You Need to Know

As of 1 July 2023, the Commonwealth penalty unit rate has seen another increase, now resting at $313 per unit. This change follows a previous increase in January 2023 from $222 to $275.

What does this mean for you? 

If you fall behind on your tax lodgements, expect more substantial financial penalties.

These penalties may apply to late lodgements of various returns and reports, including but not limited to:

  • activity statements
  • income tax returns
  • FBT returns
  • PAYG withholding annual reports
  • single touch payroll reports
  • annual GST returns and information reports
  • taxable payment annual reports.

For small businesses, these penalty rates translate to base penalties ranging from $313 (1 penalty unit) to $1,565 (5 penalty units) for every 28 days a lodgement is overdue.

Lodgement Penalty Amnesty for Small Businesses

There is some good news for small businesses facing overdue income tax returns, fringe benefits tax returns, or business activity statements. 

The ATO is extending a helping hand through a lodgement amnesty, valid until 31 December 2023.

Announced as part of the 2023–24 Budget, this amnesty covers tax obligations originally due between 1 December 2019 and 28 February 2022. 

Eligibility is granted to small businesses with an aggregated turnover of less than $10 million at the time the original lodgement was due.

Navigating the Changes: Your Next Steps

To avoid the pitfalls of revised, higher penalty rates, it's crucial to ensure you provide us with all necessary information well before the lodgement due date. This will ensure your lodgements are completed on time, safeguarding you from unnecessary penalties.

Should you anticipate any delays, we recommend engaging with the ATO and communicating your situation. We're here to assist you in requesting lodgement due date extensions, applying for remissions, or even establishing payment plans to manage your tax debts effectively.

Small businesses have the opportunity to benefit from the lodgement penalty amnesty, allowing you to submit eligible overdue forms before 31 December 2023. The ATO will automatically remit any associated failure-to-lodge penalties.

At First Class Accounts Ovens and Murray, we're here to guide you through these changes.  Should you have any questions please contact us.