Sometimes, the way you approach tax matters can end up making a big difference to your bottom line and your stress levels. Here are four tips to help you achieve a better outcome when lodging and dealing with the ATO this tax time.
Tip one: Get help with tax debts early
If you’re experiencing financial difficulties and you can’t pay your tax bill, contact the ATO early to discuss your options. These might include:
Payment plans: In 2017–2018 the ATO negotiated 226,000 payment plans to allow taxpayers to pay by instalments. For tax bills under $100,000 you can set up a payment plan online through myGov. For bigger debts, contact the ATO directly to discuss a plan. Alternatively, if you don’t like dealing with the ATO, ask us to do it for you.
Debt relief: The ATO has power to release an individual from their tax bill (in part or in full) where paying the bill would leave them unable to afford food, clothing, accommodation, medical treatment, education or other necessities. In 2017–2018, the ATO granted 2,174 full or partial releases.
A good tip for anyone having trouble paying their tax bill is to stay on top of their lodgment obligations.
Even if you can’t pay, you should still lodge your tax returns and any business activity statements on time. This shows you’re aware of your obligations and you’ll avoid penalties for non-lodgment.
Tip 2: Stay off the ATO’s radar
No one wants to be audited, so it pays to know the following “red flags” the ATO looks for when analysing its vast data sources and it may help you identify when to seek professional advice:
- work-related expense claims that are unusually high or out of the ordinary;
- business expenses & business income outside the ATO’s benchmarks for your industry;
- rental expenses, especially those inconsistent with rental income or other ATO data;
- undeclared capital gains from property sales, the share market and cryptocurrency;
- undeclared income (g. cash payments or income from foreign sources); and
- taxpayers who don’t lodge returns on time.
Tip 3: Manage disputes efficiently
There are many options for resolving tax disputes, ranging from lodging an objection, seeking external review, alternative dispute resolution and litigation. However, the ATO wants to resolve tax disputes quickly and fairly. The key thing is to engage with the ATO early on and be upfront.
Tip 4: Keep good records & make sure your bookkeeping is up to date
If you don’t keep records, or records that are not well organised, it can be difficult to prove your claim if you’re ever audited by the ATO. It’s essential to keep your receipts and tax invoices for all tax deductible expenses. Also, keep your bookkeeping up to date so you can lodge your BAS on time. If you have a bad compliance record, you may attract the ATO’s attention and it also doesn’t help if you’re trying to negotiate a resolution with the ATO.
Need help with a tax problem?
We’re here to help and support you in all your dealings with the ATO. Whether it’s an unpaid tax debt, a disputed assessment or a complicated deduction you’re just not sure about claiming, we will guide you every step of the way and help you achieve the best possible outcome.