ATO prosecution for failure to lodge tax returns
Failure to lodge tax returns
There has been a recent trend with the ATO heavily targeting taxpayers who have failed to lodge income and BAS tax returns over a period of time. From our experience this period commonly ranges from 2 years to 12 years for both individuals and companies, with a firmer approach towards companies.
Failure to lodge tax returns is a strict liability offence so circumstances such as health and wellbeing which may have impacted on your ability to lodge will not satisfactorily constitute a defence.
Where there has been a consistent failure to lodge, it is open to the ATO to issue a default assessment and impose a 75% penalty. If this has not been successful the ATO then prosecute the taxpayer in either the local or district court, depending on the amount involved.
For individuals prosecution means that they will always have a criminal offence recorded against their name. This is likely to impact on job prospects and circumstances where a criminal history check is required.
For companies the maximum penalties which can be imposed by the court are much higher, which means that this may force the company into liquidation. The maximum penalty for the first offence is $3,600, the second $7,200 and $45,000 for each subsequent offence.
If you have received a court attendance notice or correspondence to indicate that the ATO is seeking to prosecute you, it is important for you to seek legal advice and representation. For individuals there may be an opportunity to have the offence not recorded against your name. For companies, by satisfying certain criteria the penalty can be substantially reduced, regardless of the number of offences involved, as there will often be many offences where outstanding BAS is involved.
If you require further information on options available to you or seek representation in court please contact our team of lawyers at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.