Every Australian taxpayer is required to either lodge an annual income tax return or notify the Australian Taxation Office (ATO) if a return is not necessary. If a taxpayer fails to meet this obligation, the ATO may issue what is known as a “default assessment.” Why is this crucial? You may miss out on claiming expenses and deductions in your tax return.
While the ATO prefers to assist taxpayers in meeting their lodgment obligations, a default assessment may be issued if these cooperative efforts are unsuccessful.
A default assessment is issued in relation to:
- Taxable income, for overdue income tax returns.
- Net or assessable amounts, for overdue activity statements.
In addition to the default assessment, the ATO may apply an administrative penalty of 75% of the tax-related liability. This penalty may increase to 95% if there is a history of non-compliance. Taxpayers may also face an additional penalty for failing to lodge on time.
Before issuing a default assessment, the ATO will send a warning letter to the taxpayer or their registered tax agent. This letter will provide:
- Details of the impending default assessment.
- The deadline by which the overdue return or statement must be lodged to avoid the assessment.
If the taxpayer does not lodge by the specified date, the ATO will issue the default assessment and apply the relevant penalties.
We’re Here To Help
At The Quinn Group, the expert team of tax accountants and tax lawyers can help. We understand both the legal and financial aspects of dealing with the ATO when lodgment obligations are missed. If you have overdue returns or have received a warning letter or default assessment, our team can help you resolve these issues and bring your tax affairs back into compliance. You can submit an online enquiry or contact us at 1300 QUINNS (1300 784 667) or +61 2 9223 9166 to schedule an appointment with our team.
