ATO allowances on late lodgment and penalties

Tax & Super Australia recently conducted a member survey asking if members supported proposals made by professional bodies, including Tax & Super Australia (TSA), that the lodgment due date for all tax returns be extended to 30 June 2020. 

TSA believed this extension was needed in light of the extra COVID-19-related workload many practitioners have taken on, including to help clients with the government’s stimulus package. In addition, TSA had co-signed a letter with other professional bodies to the Commissioner of Taxation calling for an extension to 30 June 2020.

Then late yesterday, Hoa Wood, ATO Deputy Commissioner, sent the following email to Tax & Super Australia’s Tax Counsel, John Jeffreys [emphasis added]: “We recognise and appreciate your efforts to help your clients meet their lodgment and payment obligations over the last few months, and that under the current circumstances there have been additional pressures on the tax profession to assist clients accessing support due to the economic impacts of COVID-19 and the recent bushfires.

“To support you and your clients during these difficult times we have provided automatic lodgment and payment deferrals, put in place in April 2020, and continuing access to a range of other services for tax professionals.

There will be no further changes to lodgment and payment due dates for any obligations due in May and June 2020 that already have automatic deferrals applied.

“However, if you or your clients are unable to meet lodgment due dates during this period; no late lodgment penalties will be imposed for returns lodged by 30 June 2020, you will not lose access to your lodgment program, and you will not be adversely affected in your future dealings with us.

“While the general interest charge will still be applicable, you can apply for remissions and we will take a reasonable approach in assessing your request. If your client is unable to make a payment by the due date, you can also submit a ATO-assessed payment deferral request on their behalf.

“If you, or your clients, feel overwhelmed or are behind with your lodgment program, we can help. Contact us as early as possible, so we can work with you to find a solution.

“We [the ATO] will be issuing a special edition of the Tax professionals newsletter in the comings days to consolidate key information on COVID-19 topics and support available to tax professionals. The special edition aims to help you find the available information we have published over the past few months in one location. We have used feedback from across the profession, including the Tax Practitioner Stewardship Group, to help us build this edition.”

The key points from this message

  1. There will be no more blanket deferrals in relation to tax returns for the year ended 30 June 2019.  The above announcement is not a deferral of the lodgment dates of tax returns.
  2. You may lodge tax returns for your clients for the year ended 30 June 2019 up to 30 June 2020 without late lodgment penalties.
  3. As this is not a deferral of the lodgment date of tax returns, the General Interest Charge will still apply.  However, the ATO has indicated that it will take a reasonable (lenient?) position in relation to requests for remission of GIC.
  4. You can still apply for lodgment deferrals for your clients beyond 30 June 2020.  Tax & Super Australia has been assured that the above announcement will not have any impact on the attitude of the ATO to granting deferrals of tax return lodgments and payments beyond 30 June 2020.

Advocacy of Tax & Super Australia
Of the more than 530 members who gave their feedback to the above mentioned member survey, nearly 90% supported an extension to at least 30 June 2020.

Following the survey, we sent out a press release to the media that detailed the survey results and why we believe an extension is necessary. Accountants Daily featured an article detailing these results on its website. We also shared the survey results (de-identified) with our ATO regular contacts.

While we were not able to obtain the blanket deferral to 30 June 2020, as noted above, but the remission of all late lodgment penalties is an outcome that is close to that objective.

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