Not lodging your tax returns can result in criminal charges. If the ATO is chasing you for your returns, there are a few things you can do to minimise the consequences either before or after you receive a summons to attend Court.
If you have received a warning from the ATO
If the ATO has given you a warning that you must lodge your returns, the first thing you should do is ask for more time to comply. You will need this time to get your records together and find someone to help you to lodge your returns, such as a bookkeeper or an accountant. If you can do this before time runs out, then you should be able to avoid any formal criminal charges being laid.
You can ask for more time by either calling the ATO, or having your agent submit a request via the Tax Agent Portal.
If you can’t meet the deadline that you agreed to with the ATO, let it know as soon as possible. Tell them the reasons why – it might be that you’re unable to find documents and you need to wait for a third party to provide them (such as your bank, or a supplier), or that your bookkeeper or accountant has been unable to meet the deadline promised to you.
Explain this to the ATO as clearly as possible, and tell them when you will lodge your returns. Usually, if your timeline is reasonable and you are co-operating with the ATO, then it will allow you more time before taking formal steps.
If you have received a summons to attend Court
If you have already been served with a summons to attend Court for not lodging tax returns, you should seek legal advice from a tax lawyer. The consequences of being charged can be quite serious, and you need a lawyer by your side who knows what they are doing and how to minimise the damage.
The penalties for these charges are quite high. As from 1 July 2017, the maximum penalty for the first charge is $4,200, and $5,000 for the second and each subsequent charge. Lower penalties apply for offences that happened before 1 July 2017.
Head over to the Hartigan Law section 8C penalty calculator to learn what your maximum potential penalty might be if you’re convicted of all charges.
The penalties can add up quickly, especially if you haven’t lodged Business Activity Statements (which are typically required to be lodged four times a year).
If the ATO makes an election to treat the offence otherwise than as a “prescribed taxation offence”, then a prison sentence can also be imposed.
You can calculate your own maximum potential penalty by using the Hartigan Law section 8C penalty calculator.
These maximum penalties are the upper limit prescribed by the law. The actual penalties are usually much lower and are determined by the Magistrate, by taking into consideration a number of things.
Speaking to a lawyer before you go to Court is important. A specialist tax lawyer can help you to make the right submissions to the Court and make sure you don’t pay a higher penalty than you have to. In some cases, you may even be able to have the charges withdrawn by the ATO, or dismissed by the Court without a conviction being recorded. This is where having a good understanding of the tax law is helpful – a tax lawyer knows what your tax obligations are, and therefore knows then it might be possible to have charges withdrawn.
If you haven’t found a lawyer before your Court date, you should ask the Magistrate to grant you an adjournment to give you time to find the right help.
Lodge your returns
If you still haven’t lodged your returns after being served with a summons to attend Court, then you should get onto this as a priority.
One of the key things that the Court will take into account in deciding your sentence, or whether to dismiss the charges, is whether you have done the right thing since the charges were brought. If you have lodged the returns, the Court will take a more favourable view of you.
If you need more time to lodge them, then you can request an adjournment to give you time to get everything together. The Court will usually allow you more time, as long as it is reasonable.
If you have still not lodged the returns before the Court makes its final decision, then you can expect a higher penalty and an order from the Magistrate that you lodge the documents within 60-90 days. If you don’t comply with this Court order, you will find yourself in court again, facing more penalties and the potential of time in jail for not doing what the Magistrate told you to do.
How Hartigan Law can help
If you’ve been charged with these offences, then you should consult a tax lawyer to help (not just any kind of lawyer!).
I can help by analysing your case from a tax law perspective, to find out if you are likely to have your charges withdrawn or dismissed. If you are, then I can make these applications for you. It’s important that you don’t end up being convicted and charged a penalty if you can avoid it.
I can also represent you in Court in South Australia, and put you in the best position to receive the lowest possible penalty.
I had a Court summons for failing to lodge tax returns. What I desperately needed was a specialist in taxation, a legal firm that did not treat me as another number.
I found Hartigan Law on the internet and the website told me exactly what I wanted to read. I met with Catriona and we had a lengthy discussion about my situation, how it arose and what she thought was the best way to handle it. Before the hearing there were a few more meetings with Catriona.
The day of the hearing came, and that was where I saw that I had definitely made the right choice in having Catriona represent me. She confidently and purposefully explained my situation to the magistrate, her defence was strong reasonable and truthful. I had never hoped for such a great result and as low a fine, and it showed that Catriona was there to represent me, to do her best and not just go through the motions.
If ever I had to contend with the ATO again Catriona is definitely the person I want in my corner.
About Hartigan Law
I am a specialist tax disputes lawyer with over a decade of experience in dealing with the ATO.
I help people when they get into trouble with the ATO, whether it be for criminal charges or a tax debt related issue.