You could commit a tax crime this month without knowing

(Photo by Ian Waldie/Getty Images)

Australian taxpayers are reminded of the looming October 31 deadline for lodging tax returns and the consequences of ignoring it.

Not lodging a tax return is classified as a crime in Australia.

In extreme circumstances, taxpayers can end up in prison for 12 months for the offence, according to the Australian Taxation Office.

"Our decision to take this type of action will not be treated lightly, so before any action commences we will notify you of our intentions (usually by phone and in writing) and allow you sufficient time to bring your overdue lodgments up to date," states the ATO website.

Even if no jail is involved, financial penalties can be hefty – a maximum fine of $8,500 can apply upon prosecution, according to accounting firm H&R Block.

"Even though it’s not common, the ATO can and does prosecute for failing to lodge tax returns."

To get to the point of prosecution, the taxpayer will have ignored a lot of emails, phone calls, text messages and letters from the tax office.

For those that have not lodged a return after the October 31 deadline, these are the actions the ATO takes before resorting to court action:

  • SMS reminder

  • Messages in MyGov

  • Letters

  • Telephone calls

  • Applying a penalty

  • External collection agency: some cases could be referred to a third party chaser

  • Sending a final notice

  • Sending a default tax assessment with an additional penalty

  • Audit

A default assessment – which is when the ATO estimates your numbers to calculate your tax obligations – should be avoided, according to H&R Block.

"As these are estimates, they’re rarely correct and often show a higher tax liability than you would actually owe as they don't take deductions into account.

"You’re able to appeal a default assessment, however, you must be able to show what your actual tax liability is. Simply arguing that the ATO’s figures aren’t correct isn’t enough."

Lodging late or not lodging at all reportedly increases a taxpayer's chances of copping an audit, which when the tax office investigates a person's financial affairs.

What if I don't need to lodge a tax return?

If the total income was below the tax-free threshold of $18,200, the taxpayer may not need to lodge a return. But in such circumstances, a non-lodgement notice still needs to be submitted to the ATO.

"Without a non-lodgment advice, the ATO will assume you need to lodge and may take compliance action in order to force you to," states H&R Block.

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