We hope this newsletter finds you well. We want to bring your attention to some important updates regarding the Australian Taxation Office’s (ATO) recent initiatives.
From July 1, 2024, the ATO has significantly increasing its compliance and lodgment enforcement activities. This means stricter measures to ensure taxpayers meet their obligations on time. Here’s what you need to know to stay compliant and avoid penalties.
Key Focus Areas The ATO is targeting:
- Correct Registration: Ensuring taxpayers are properly registered for GST and other key areas.
- Refund Exploitation: Increased pre-issue reviews for high-risk GST refunds and fraud detection.
- Large Business Compliance: Continuing assurance programs for large businesses.
- Non-Lodgers: More direct contact with those who haven’t lodged returns.
- Debt Recovery: Prioritizing GST debt recovery, especially for small businesses.
Penalties for Late Lodgments
It’s crucial to understand the consequences of failing to lodge on time:
Failing to lodge on time can result in significant penalties:
- Small Entities: $330 per 28-day period, up to $1,650.
- Medium Entities: Double the small entity rate.
- Large Entities: Five times the small entity rate.
- Significant Global Entities: 500 times the base penalty amount.
ATO’s Stance on Penalty Remission
The ATO has become increasingly unwilling to remit interest and penalties for late lodgments. This marks a significant shift from their previous approach, especially during the COVID-19 period.
Key Points to Remember:
- The ATO may issue default assessments for overdue lodgments without warning in certain circumstances.
- An administrative penalty of 75% of the tax-related liability may be applied for each default assessment issued.
- The ATO considers various factors when calculating default assessments, including previously lodged returns, income data from third parties, and industry benchmarks.
New Compliance Initiatives
- Counter Fraud Strategy: $187.0 million allocated over four years to strengthen fraud detection and prevention.
- Shadow Economy Compliance Program: Extended for two years from July 2026 to combat shadow economy activities.
- Tax Avoidance Taskforce: Extended for two years from July 2026 to address tax avoidance risks.
- Personal Income Tax Compliance Program: Extended for one year from July 2027 to address non-compliance issues.
Our Recommendation
To avoid these penalties and maintain good standing with the ATO, we strongly advise:
- Ensuring all your lodgments are up to date
- Submitting future lodgments by their due dates
- Contacting us immediately if you foresee any difficulties in meeting lodgment deadlines
- We will schedule your work in advance, and our team will reach out to you shortly to discuss the details.
At Seed Accounting, we’re here to help you navigate these changes and ensure your tax affairs are in order. Don’t hesitate to reach out if you have any questions or concerns.
Key dates for January and February 2025
- 14/01/2025 – December 2024 Payroll Tax lodgment and payment
- 15/01/2025 – SRO Vacant Residential Land Tax Declarations
- 28/01/2025 – Quarterly Superannuation Guarantee contributions
- 21/02/2025 – January 2025 Monthly Activity Statement lodgment and payment
- 28/02/2025 – December 2024 Business Activity Statement (BAS) lodgment and payment
Best regards,
The Seed Accounting Team
