From 12 December 2011, the Australian Tax Office will send default assessment warning letters to some clients of tax agents with overdue income tax returns where the Tax Office has evidence these taxpayers received taxable income in the relevant financial years.
These letters are titled ‘Default assessment warning’ and are part of the Tax Office’s ongoing work to address non-lodgment. The Tax Office has indicated that if the overdue returns are not lodged by the date specified, it will issue default assessments to these taxpayers based on the estimated taxable income included in the letter.
Where the Tax Office has issued default assessments, taxpayers can incur both of the following:
• failure to lodge on time penalties, and
• administrative penalties of 75% of the tax related liability from the default assessment, after taking into account any pay as you go (PAYG) credit and any other tax credits available.
Action to be taken
If a tax agent receives a letter for any of their clients, the agent must ensure that the relevant income tax returns are lodged by the date specified in the letter.
If the agent no longer acts for the taxpayer, they are required to advise the Tax Office. Also, where possible, agents are required to:
• provide the Tax Office with the latest contact details they have for the taxpayer
• forward the letter to the taxpayer (ie. their former client) or inform them that such correspondence has been received, and
• update their client list
If you have received one of these letters do not “sit on it” – action it now!! We can help you lodge you return ASAP. Here at The Quinn Group our experienced team of Tax Agents and Accountants can assist your small business with all of its taxation needs as well as ensuring you are compliant with all of the ATO concerns mentioned above in order to prevent any repercussions. Please submit an online enquiry or call us on 1300 QUINNS (784 667) to book an appointment.