Something that people often get confused about it is when do you actually have to lodge your tax return. And like many things in tax…. The answer is… well it depends… it’s really easy though and there are two deadlines for an individual tax return that we will explain.
Let’s start with some tax basics about your tax return:
The tax year in Australia runs from 1 July to 30th June. Eg 01/07/2017 to 30/06/2018 – this is known as the 2018 Financial Year. You can lodge your 2018 tax return anytime from July 2018 until 31st October 2018. However, if you lodge your tax through an Accountant you can actually get an extension on your tax until the 15th May of the following year. So in our example – that would be 15th May 2019!! We refer to this as the Accountant’s extension and you must make sure that you are on your tax accountant’s list to be able to qualify for the extension.
Why utilise the tax return extension?
Whilst we always encourage you to lodge your tax return promptly if you are expecting a tax refund, we understand that life can get in the way and all of a sudden it’s Christmas time and you’ve realized that you forgot to lodge your tax return. Never fear – if your listed with a tax accountant there’s nothing to worry about. (If you aren’t listed with a tax accountant, you can still lodge your tax return through your tax accountant and they can help you liaise with the ATO about getting any late fines remitted).
We help a lot of sole traders or clients with positively geared properties or bank interest that end up with a tax payable on their tax return claim the extension until 15th May next year. Whilst paying tax may be inevitable (and we do everything we can to legally reduce this), it’s a smart strategy for example to have the tax money sitting in your mortgage offset account (saving you money) and pay on the deadline.
Bonus Tax Tip for dealing with tax payable on your tax return – eg a tax debt
If you have tax payable on your tax return and you’ve lodged on the 15th May, your tax accountant can also help you negotiate a payment plan. We’ve helped a lot of clients negotiate a two year payment plan. Make sure when you are in a payment plan with the ATO, that you don’t breach this otherwise it start’s to get complicated.
Example: Let’s say Bob had $24,000 tax payable from his 2018 tax return. Bob could wait until 15th May 2019 to lodge his tax return and than go into a payment plan so that he has monthly repayments of $1,000 due on the 15th of each month starting June 15th 2018 and finishing 15th May 2020. It’s important to note that when you negotiate a payment plan for a tax debt with the ATO you must pay all future tax liabilities on time.