Default assessments for non-lodgers
The ATO has advised they will be sending 'default assessment warning letters' to taxpayers who have overdue income tax returns, where the ATO also has evidence that they received taxable income in the relevant financial years.
If the overdue returns are not lodged by the date specified in the letter, the ATO will issue default assessments for these taxpayers based on the estimated taxable income included in the letter.
The ATO warns that taxpayers who are issued a default assessment may incur the following:
- failure to lodge on time penalties; and
- administrative penalties of 75% of the tax related liability from the default assessment (though the penalty may be reduced by taking into account any PAYG credit and other tax credits available).
In addition, administrative penalties may increase by 20% if the taxpayer has had a penalty previously applied for a default assessment.
Editor: Note that these letters may in some cases be sent directly to us, in which case we will liaise with the relevant clients to lodge outstanding returns and minimise any penalties.