The Australian Taxation Office (ATO) can apply penalties when tax returns and other required documents are lodged late. However, missing a tax return deadline does not automatically mean you will receive a penalty. The ATO considers the circumstances surrounding a late lodgment when deciding what action to take. See the ATO failure-to-lodge guidance.
Why Paramedics Fall Behind on Tax
Continuing to leave an overdue tax return unresolved can make the situation more complicated.
For paramedics, ambulance officers and other emergency service workers dealing with shift work, overtime and demanding schedules, it can be surprisingly easy for tax time to fall down the priority list.
If you are already behind, the important thing is to start working out exactly what needs to be lodged.
How Do Late Tax Return Penalties Work?
If you were required to lodge a tax return and did not lodge it by the due date, the ATO may apply a Failure to Lodge on Time (FTL) penalty.
For smaller taxpayers and entities, the base penalty is generally calculated using penalty units for each 28-day period, or part of a 28-day period, that the document remains overdue. The standard calculation is capped after five 28-day periods for the relevant document.
However, the way your case is treated can depend on your individual circumstances, including:
- how late the return is
- whether it is an isolated late lodgment
- whether you have several outstanding returns
- your previous tax compliance history
- whether the ATO has contacted you about the overdue return
- the circumstances that contributed to the delay.
Being late does not automatically mean you will receive the maximum possible penalty.
What If My Tax Return Is Several Years Late?
If you have fallen behind by several years, the penalty for one return does not simply continue growing forever. The standard base Failure to Lodge penalty for an individual document is capped.
However, if several separate tax returns are outstanding, each financial year may represent a separate lodgment obligation. For example, if you have not lodged returns for three or four financial years, those years generally need to be considered individually.
There may also be separate consequences if lodging those returns results in additional tax being payable. The outcome can therefore vary significantly from one year to another.
Late Lodgment and Late Payment Are Different
It is important to distinguish between lodging your tax return late and paying tax late. A late-lodgment penalty relates to failing to lodge a required tax return or document by its due date. A tax debt relates to money you owe the ATO.
If an overdue return is eventually lodged and results in tax payable, interest may also apply to the unpaid amount. The ATO refers to this as the General Interest Charge (GIC).
Depending on your circumstances, you could have:
- an overdue return that results in a refund
- an overdue return with no tax payable
- an overdue return that creates a tax debt
- several outstanding years with different outcomes.
You will not know your actual position until the returns are prepared.
What If My Overdue Tax Return Gives Me a Refund?
Being behind on your tax returns does not automatically mean that you owe the ATO money. Depending on your income, tax withheld and eligible deductions, an overdue return may actually result in a refund.
This can be particularly relevant for paramedics and ambulance workers who may have legitimate work-related expenses that need to be considered when preparing their returns. Depending on your circumstances, these might include expenses relating to:
- uniforms and protective clothing
- laundry expenses
- professional registrations
- union or association fees
- training and education
- work-related travel
- equipment used for work
- other employment-related expenses.
Whether an expense is deductible depends on the individual circumstances and the normal tax deduction rules. The key point is that you should not assume an overdue return automatically means a large tax bill.
What If I Cannot Afford the Tax Bill?
Worrying about a potential tax debt is one reason people continue postponing overdue returns. But lodging your tax return and paying an ATO debt are related but separate issues.
If your overdue return results in tax payable and you cannot afford to pay the entire amount immediately, you may be able to arrange a payment plan with the ATO. This can allow eligible taxpayers to repay the debt through instalments rather than making one large payment.
Interest may continue to apply to an outstanding balance, so a payment arrangement should still be taken seriously. However, delaying your tax return generally gives you less certainty about how much you actually owe.
Can an ATO Late-Lodgment Penalty Be Reduced?
Depending on the circumstances, you may be able to request that the ATO remit, or reduce, a penalty. The ATO can consider requests to remit certain penalties, including Failure to Lodge penalties, in full or in part.
Factors that may be considered include:
- why the return was lodged late
- circumstances outside your control
- your previous compliance history
- steps you have taken to correct the problem
- your individual circumstances.
For ambulance workers, there may be periods where unusual work demands, extended shifts, deployments or significant personal circumstances contribute to falling behind. That does not automatically mean a penalty will be removed, but the circumstances surrounding the late lodgment may be relevant when a remission request is considered.
Penalty remission is not guaranteed and each case is assessed individually.
What If You Are Five or Ten Years Behind?
Finding out that you have five, ten or even more years of outstanding tax returns can feel overwhelming. The first step is not to attempt to prepare every return at once.
Instead, start by determining which financial years the ATO actually records as outstanding. Each year can then be reviewed to determine whether you need:
- a tax return, or
- a non-lodgment advice because you were not required to lodge for that particular year.
Just because a financial year is old does not necessarily mean it can be ignored. Previous-year tax obligations can still need to be resolved even when several years have passed.
What Information Might a Paramedic Need for an Overdue Return?
If several years have passed, finding old tax records can sometimes be one of the biggest barriers to getting started. Depending on the financial year and your circumstances, useful information may include:
- ambulance service income
- PAYG income statements or payment summaries
- overtime and allowance information
- bank interest
- private health insurance information
- work-related expense records
- uniform and laundry expenses
- professional registration fees
- training and education expenses
- work-related travel information
- union or professional association fees
- investment or rental property information
- other income earned during the year.
You may not need to have every document organised before seeking assistance. The first step can simply be working out which years are outstanding and what information will be required for each one.
Shift Work Can Make Tax Easy to Put Off
Paramedics and ambulance officers often work irregular rosters, night shifts, overtime and long hours. When you are focused on work and managing everything outside it, tax administration can easily be pushed to the bottom of the list.
One missed year can then become two. Two can become four. Eventually, the thought of sorting everything out can become more stressful than the actual process of getting started.
Leaving the returns outstanding does not provide certainty about whether you owe money, are entitled to a refund or have penalties that need to be addressed. Preparing the returns does.
Do Not Let Fear of a Penalty Create Another Overdue Year
The longer an outstanding tax return remains unresolved, the easier it is for another financial year to be added to the backlog.
Getting started gives you something much more useful than worrying about what might happen: a clear understanding of your actual tax position.
Once the outstanding years have been reviewed, you can determine what needs to be lodged, whether there are refunds available, whether any tax is payable and whether penalties or interest need to be dealt with.
Paramedic With Overdue Tax Returns?
AmbosTax specialises in tax services for paramedics, ambulance officers and other ambulance service professionals.
If you have missed one return or have several years of tax returns outstanding, we can help you work through what needs to be lodged.
Common questions
Will the ATO automatically fine me when I lodge a late tax return?
Not necessarily. The ATO can apply a Failure to Lodge on Time penalty, but it considers the circumstances surrounding a late lodgment, including whether it is an isolated case and your compliance history.
How is a Failure to Lodge on Time penalty calculated?
For smaller taxpayers, the base penalty is generally one penalty unit for each 28-day period, or part of a 28-day period, that the document is overdue, capped at five penalty units for that document.
Does each overdue tax return attract a separate penalty?
Each financial year is generally a separate lodgment obligation, so if several returns are outstanding the ATO can consider each year individually.
Can an overdue tax return result in a refund?
Yes. Depending on your income, tax withheld and eligible work-related deductions, an overdue return may result in a refund rather than a tax debt.
What if I cannot pay the tax bill from an overdue return?
Lodging and paying are separate steps. If you cannot pay in full, you may be able to set up a payment plan with the ATO. General Interest Charge may continue to apply to the unpaid balance.
Can I ask the ATO to reduce a late-lodgment penalty?
You can ask the ATO to remit Failure to Lodge penalties in full or in part. Circumstances such as unusual work demands or matters outside your control may be considered, but remission is not guaranteed.
Behind on your tax returns?
Whether you are trying to catch up on last year’s return or have not lodged for several years, book an appointment with AmbosTax and get your tax affairs back on track. Do not let another financial year get added to the backlog.
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