When can you get an extension of time to lodge your tax return?
Tax time 2023 has now officially ended, the last day for lodgment being 31 October 2023. Taxpayers that have yet to lodge should do so as soon as possible to avoid any penalties. For those that may need additional time to lodge, a lodgment deferral may be requested from the ATO. While this was better done before the lodgment due date, requests for deferred lodgment can still made but need to contain detailed information on the circumstances that prevented the request from being made on time. An approved deferral lodgment due date does not defer the time for payment.
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Factors the ATO considers in deciding whether to grant an extension of time to lodge
Taxpayers that don’t use the services of a registered tax professional can generally make deferral requests over the phone with the ATO, but in some circumstances, the request may need to be made in writing or online. Information that will need to be provided include the type of document and the year or period it relates to, ABN or TFN, circumstances that prevented lodgment by the due date, steps taken to mitigate those circumstances, and the new proposed date of lodgment.
Once a request is lodged, the ATO will grant a deferral where it is fair and reasonable, considering all relevant circumstances. This includes:
- the reason why the taxpayer was unable to lodge on time;
- the value of the information provided in the document;
- the size and structure of the entity (large corporate entities are more likely to have the ability and resources to overcome circumstances that might affect their ability to not lodge by the due date);
- the risk to revenue;
- the taxpayer’s compliance history as a whole (lodgment of taxation returns, activity statements and other documents, payments on time and previous dealings with the ATO);
- the length of time needed to lodge the document (a deferral will usually be granted where an entity has a good compliance history and requests a short period of additional time to lodge); and
- any other relevant information relating to the individual circumstances.
In addition, the ATO also recognises that there may be circumstances that are unforeseen or exceptional and so will generally grant a deferral in those circumstances. This includes natural and other disasters, impeded access to records, serious illness or death of a family member/tax professional/critical staff member, severe lack of knowledge and understanding of tax obligations, and system issues with either the ATO or the business tax system.
Effect of getting a lodgment deferral
Successfully deferring lodgment means that a taxpayer will not be subject to a failure to lodge (FTL) penalty or other administrative penalties, and will not be subject to compliance action for that time period.
Taxpayers that aren’t successful or have not submitted a deferral may be subject to action from the ATO including the FTL penalty, being subject to a default assessment, or referral for prosecution.
There are limited circumstances in which the ATO will consider it not appropriate to pursue overdue lodgment, even if no deferral is applied for. Examples include cases where there is little risk to revenue, or where the value of information to be provided is minimal and follow-up action would not be cost-effective.
It should be noted that the ATO’s decision not to pursue overdue lodgment can be reviewed at any time and does not remove the taxpayer’s obligations to lodge the document. Therefore, taxpayers with nil tax payable or a refund due should still either lodge their tax returns quickly or apply for a deferral request with the ATO.
An approved deferral lodgment due date does not defer the time for payment.
Taxpayers that need additional time to pay can also request a deferral for payment which will need to be made separately from the lodgment deferral request.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.