As a citizen of a state and an income earner, you are obliged to pay taxes which are then used to run government duties. Besides paying taxes, you are required by tax regulating agencies to file a compliance form before the year ends. Failure to do this usually results in penalties that can be harsh.
Most individuals take tax authorities’ warning for granted because they have the tendency not to bite immediately. However, if you continue with the non-payment trend for almost six years, they’ll begin opening their crocodile-sharp teeth ready to take a bite of you.Remember, filing inaccurate data with an aim to dupe the agents will amount to serious punishment as well.
Are you aware of the penalties awaiting you? Well, don’t worry, we’ve highlighted them for you below.
The consequences of unfiled or felonious taxes
If you fail to file your tax returns by the closing date (including the extra duration-usually six months), you will be fined 5% of the amount due each month up to the fifth month. The penalty cannot exceed 25%. If you don’t owe tax agencies anything but have an unpaid tax, there will be no fines, but there could be some other drawbacks.
No tax refunds
Tax refund also called a tax back is the amount owed by the agencies if the taxes filed before were more than what was due. The only way to redeem this money is to file tax returns. If three years elapse without filing a tax return, you can as well forget such money ever existed.
Losses won’t be carried forward
Filing a tax return is one way to notify tax agents about the progress of your business. If a loss is encountered, it can be carried forward until a better day comes. If you don’t file taxes, the tax agents won’t know about your loss, and thus it will not be carried forward.
Now, when you decide to play hard to get with tax agents by avoiding to file your taxes, they will file one for you. This form of filing is called “substitute returns” or simply SFR. What’s the problem with it? I hear you ask. With this method, you lose your eligibility to unclaimed tax credits and possible tax refunds. The tables can turn from the agents owing you to you owing them.
Although not common, tax agents can put you behind bars for failing to file returns with a fine of several dollars for each missed year. Note that tax authorities see non-compliance as a way to avoid paying taxes. That is why the jail term is usually not below one year.
Filing taxes should be one of the must do things on your list as an income earner. Even when you don’t have money to pay the dues, just file a return so you can deal with the debt later on. Visit this site : http://www.taxreturn247.com.au