Every year, thousands of individuals and businesses don’t lodge tax return for various reasons. With one of the main reasons is the fear of not being able to pay the tax debt owed.
Failing to lodge a tax return is a criminal offence under the Taxation Administration Act 1953. It carries a maximum penalty of $5,500 and in some cases, a jail sentence of up to 12 months can be imposed. The ATO will usually resort to other means prior to seeking a jail sentence for a taxpayer, including imposing penalties.
Recently, a 65-year-old Geraldton woman was jailed for 12 months for failing to lodge various BAS and income tax returns. Prior to being sentenced to imprisonment the Court had ordered her to lodge her outstanding returns and issued her with a suspended sentence. She, however, failed to lodge the returns and was subsequently sent to jail.
What Can You Do If You Have Unmanageable Tax Debt?
If you are holding off lodging your tax return because you are worried that you will not be able to pay the assessed tax, don’t. If you can’t afford to pay your tax, we can help you.
There are steps that the ATO can take to recover tax debts and more information can be found here. In short, the ATO can:
- Issue Garnishee Notices in relation to tax debts by both individual and companies;
- Issue Director Penalty Notices; and
- Commence liquidation or bankruptcy
Our advice is always to keep your tax return lodgements up to date. If you cannot manage your tax payments, you can enter into a payment arrangement with the ATO for your tax debt. Over the years, we have helped many clients deal with their tax debt by negotiating a payment arrangement with the ATO. These are some of the examples:
- We successfully negotiated payment arrangements on behalf of a business to avoid liquidation. The terms include monthly payments and a lump sum payment at the end of the arrangement; and
- We negotiated a remission or waiver of interests and penalties totalling nearly $114,000, and monthly instalments for our client’s remaining tax debt to avoid bankruptcy.
Contact Us For Assistance
If you have or think you will have an unmanageable tax debt, please contact us for a free, no-obligation consultation. We will help you consider all options that are available to you