Australia’s financial year runs astray from your run-of-the-mill calendar.
The time period covered by Australia’s tax returns does not correspond to a regular calendar year. Instead, the tax year begins in July and ends in June of the following year. Of course, that’s not to be confused with the tax season which will take you on a 4-month stretch from July to October.
Don’t wait until the October deadline to lodge your tax return! Instead, it’s best to get it out of the way as soon as possible.
When does the financial year start and end?
The Australian tax year (aka financial year) begins smack-dab in the middle of your calendar year on 1 July and ends 30 June of the following year. That means that all of your financial successes and mishaps that occur during that time will be reflected on your tax return for that year.
That brings us to the tax season. This begins on 1 July and ends on 31 October each and every year. You have these four months to lodge your current year tax return on time without having to worry about any ATO penalties.
What if I lodge after the deadline date?
If you fail to lodge your return by the end of tax season on 31 October, you may have to pay a penalty.
The ATO is pretty generous, however, and usually doesn’t apply a penalty if you:
- lodge the return voluntarily, and
- do not owe any tax payable
On the other hand, you most likely will have to pay a penalty if:
- you have more than one tax return outstanding
- you have a poor lodgment history, or
- you have not complied with a request to lodge your tax return
If you’re due a refund, there’s no reason not to file. After all, it’s your money you’re getting back.
If you owe the ATO, don’t think you can escape them by not lodging a return. The ATO could issue you a default assessment warning letter (DAWL). If you don’t lodge, the ATO will estimate your tax liability, often for more than you actually owe because they don’t know all of the allowances and deductions you could be eligible for.
It is possible to lodge a tax return before the end of the financial year, but only in two very limited circumstances.
1) You are a foreign resident for tax purposes (an Australian nonresident) and you
- are leaving Australia permanently, and
- will no longer earn Australian-sourced income other than interest, dividends, and royalties
2) You are an Australian resident for tax purposes and you
- are leaving Australia
- will cease to be an Australian resident for tax purposes, and
- will no longer derive Australian-sourced income other than interest, dividends, and royalties.
Now it’s time to mark your calendars!
Let’s recap. Grab your agenda, smartphone, or personal assistant and make sure these dates are scheduled:
1 July: This date marks the start of the new tax (financial) year AND the start of the current tax season.
30 June: This day marks the end of the tax (financial) year.
31 October: This is the tax season deadline.
Today: And today is the day to either get caught up on lodging prior year tax returns or preparing your current year tax return. Need help? E-Lodge allows you to lodge right from the comfort of your own home!
Updated 27 July, 2016
Tags: australian tax, australian tax season, financial year, tax deadline, tax season, tax time