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Final countdown to avoid a tax hit

Oct 24, 2016

TAX time ends one week from today and people yet to lodge their return are being urged to act now to avoid hefty penalties and interest charges.

The Australian Taxation Office says more than 8.2 million of the nation’s 12.8 million individual taxpayers already have lodged, with eight out of 10 of them receiving a refund.

“The average refund is $2400 and refunds are going through in about seven days,” says ATO assistant commissioner Graham Whyte.

He says the ATO’s free online lodgement tool MyTax has increased in popularity, with the number of self-lodgers up 10 per cent on last year at 2.5 million.

“It is automatically pre-filled with information we received from third parties such as your employer, bank and other government agencies, so all you need to do is add in your deductions, check the information and hit submit. About one-third of people say it’s only taking them 15 minutes to do their returns.”

Deakin University Business School senior lecturer Dr Adrian Raftery says late lodgers who owe the ATO money face late penalties and interest charges.

“The general interest charge is what they apply the penalty to. It changes each quarter, and the current rate is 8.76 per cent. That’s a strong incentive for people to lodge,” he says.

One way to beat penalties is to sign up with a tax agent before October 31, because they can extend your deadline to May next year, Raftery says.

Tax agents typically cost from between $150 and $200 for basic returns, and they will often find deductions you haven’t thought about, he says.

“Most people are due a refund so it’s your money you are missing out on. There’s a huge incentive to get it — Christmas is coming.”

H & R Block director of tax communications Mark Chapman says you must be registered with a tax agent to benefit from the ATO’s extended deadline.

“Self-lodgers who fail to lodge by 31 October could be hit with an immediate late lodgement penalty of $180, increasing by a further $180 for each successive 28-day period that the return remains outstanding, up to a maximum of $900,” he says.

Raftery says if you are delaying your return because of a tax debt, it’s still best to lodge this week and speak with the ATO. Debts are due on November 21.

“The ATO are really good in terms of payment arrangements, and there is scope to negotiate 12-month repayment plans,” he says.

“Talking to them in advance is a lot easier than trying to ask for forgiveness later. It’s a relationship and you want to remain in their good books — you don’t want to stretch the relationship too much because they can come down on you like a tonne of bricks.”

Origina article posted here on News.com.au on 24 October 2016.

 

 

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