Fixing the Deficit one Penalty at a time by Tina Zawila

I’ve been in this industry for 30 years, and recently it seems that the ATO Is handing out more penalties than any time that I can recall.  In particular, the Failure to Lodge On Time Penalty (FTL) is a favourite at the moment.  A cynic might suggest that this is a deliberate strategy to collect more taxes to fix the Federal Government’s deficit!

Once upon a time, if you lodged a return or activity statement late, you received a letter from the ATO warning you not to do it again.  If you were lucky you may have received a few of these before the ATO seemingly lost it’s patience and slapped you with a fine. 

These days, it seems that there is a first and final warning system and the next time you lodge a document late, a fine will apply.   And these penalties are not small change, often around $360, but can be upwards of that - recently we saw penalties of $900 for each activity statement lodged late and there were five of them!

Fines and penalties are not tax deductible, so you should not simply see them as a cost of doing business, or a cost of deferring lodgement of a return to defer the payment owing.   This strategy of putting off lodgement to put off payment is truly flawed.  Using this strategy exposes you to interest charges and a fine.  Whereas, lodging the document on time and then negotiating a payment arrangement with the ATO for the debt avoids the FTL fine.  There may still be interest charges on the delayed payment; however this interest is tax deductible to you or your business.      

Therefore, at Sothertons we strongly recommend our clients comply with their tax lodgement deadlines, and are happy to assist you in meeting these obligations to avoid fines and penalties.  We understand that there are times when cashflow can be difficult, so we can also negotiate a payment plan with the ATO on your behalf.  And remember your investment in our services is tax deductible, so in fact in some cases it would have been cheaper for the client to have us attend to the lodgements as opposed to incurring a fine with the ATO.

If you need help meeting your tax obligations, please contact our professional team on 4972 1300 today, we would be happy to help you.