First of all,<blockquote>"Nobody panic! Save the panic for when we really need it."</blockquote><div style="display: flex;"><img src="https://ezycourse.b-cdn.net/4208/cmtmjxoxc27o001y21gaucsob.jpg" alt="image" style="position: relative; width: 341px; height: auto; cursor: pointer; margin: 0px auto;"></div>I’ve been where you are. When I started my sole trader journey, as a massage therapist working on an ABN, I avoided my accounting and tax so hard I got&nbsp;nine years&nbsp;behind on my tax returns.And I’m an accountant!<div style="display: flex;"><img src="https://ezycourse.b-cdn.net/4208/cmt87i4ri1vss01z72mmdfby6.jpg" alt="image" style="position: relative; height: auto; cursor: pointer; width: 642px; margin: 0px auto;"></div>And the first person I helped after I sorted out my own mess was&nbsp;eleven years&nbsp;behind on hers.So you are&nbsp;definitely&nbsp;not the only one.In fact, there are so many people out there who are years - and even&nbsp;decades&nbsp;- behind on their tax returns, that the ATO doesn't even blink when you tell them you are.Step 1: Call the ATOYeah, you're going to have to tell them. If they haven’t already figured it out.While the very thought of that might scare&nbsp;the crap out of you, that phone call isn't going to be anywhere&nbsp;near as bad as you think it is.And it's far better that you go to the ATO, than it is for the ATO to come find you.<div style="display: flex;"><img src="https://ezycourse.b-cdn.net/4208/cmtmk8fbt29lt01xx1qsr5245.jpg" alt="image" style="position: relative; height: auto; cursor: pointer; margin: 0px auto;"></div>If you need a little pep talk, I’ve got you. You can book a&nbsp;free 20-minute Connection Call with Anna&nbsp;via the website’s Contact Us page,&nbsp;to get some reassurance and a plan for what to say when you call the ATO.And if you reeeeeeeally can’t face making that call your first step, that’s okay – you can start with Step 2 and come back to the call a little later. But I did it first, and it sure did put a rocket up my butt knowing that I had an external deadline to meet and couldn’t just do it when I got around to it (which would be in the year Never).Step 2: Work out exactly you need to lodgeWrite down everything you need to lodge, and for which years.<div style="display: flex;"><img src="https://ezycourse.b-cdn.net/4208/cmtmker962dcr01xxb6ks5a3f.jpg" alt="image" style="position: relative; width: 693px; height: auto; cursor: pointer; margin: 0px auto;"></div>Income tax returns are lodged for a&nbsp;financial&nbsp;year, not a calendar year.A financial year runs from 1st July to 30th June.If the last return you lodged was, for example, for the 2021 financial year (i.e. 1.7.20 to 30.6.21), then you need to lodge:<ol><li>2022 (1.7.21 to 30.6.22),</li><li>2023 (1.7.22 to 30.6.23),</li><li>2024 (1.7.23-30.6.24),</li><li>2025 (1.7.24 to 30.6.25), and</li><li>2026 (1.7.25 to 30.6.26).</li></ol><div style="display: flex;"><img src="https://ezycourse.b-cdn.net/4208/cmtmkhlt92f7601zc04661tzq.jpg" alt="image" style="position: relative; width: 686px; height: auto; cursor: pointer; margin: 0px auto;"></div>Then before you go panicking about a huge list of returns that need to be lodged, check if you really need to lodge a return for every last one of them.If there’s a year you know you didn’t make any, or enough, money to need to lodge a tax return, you may not need to lodge one for that year. You may be able to submit a non-lodgement advice to the ATO instead.Use <a target="_blank" href="https://www.ato.gov.au/single-page-applications/do-i-need-to-lodge">this handy-dandy free ATO tool</a> to work out if you need to lodge a return for a particular tax year. Note that you will need your income figures to use the tool, so you might want to leave this part until you’ve worked that out (see below).Step 3: Work out how you're going to lodge the returns you need to lodgeDid you know that these days, you can lodge your returns electronically yourself? Ain’t technology marrrrvellous. (When it works…)Lodging returns yourself electronically is done through myTax, which you access through ATO online services via <a target="_blank" href="https://my.gov.au/">myGov</a>.If you're really far behind, you might need to go old-school and lodge some of your returns on paper:<ul><li>The ATO currently allows prior-year individual tax returns from 2016 onwards to be lodged online through myTax.</li><li>Returns for 2014 and 2015 may also be eligible for online lodgement, depending on your circumstances. When I was sorting out my nine-year tax mess, I couldn’t lodge electronically for these two years, as I had business income, so I didn’t meet the criteria.</li><li>2013 and earlier can't be lodged through myTax — you'll need to lodge a paper return, or use a registered tax agent.</li></ul>You can check the ATO's current rules for lodging a prior-year tax return <a target="" rel="noopener noreferrer" href="https://www.ato.gov.au/individuals-and-families/your-tax-return/how-to-lodge-your-tax-return/lodge-a-prior-year-tax-return">here</a> before deciding how you're going to tackle yours.If you don’t have a MyGov account already, you can set one up&nbsp;<a target="_blank" href="https://my.gov.au/en/create-account/">here</a>.You can download paper returns from the ATO website&nbsp;<a target="_blank" href="https://www.ato.gov.au/forms-and-instructions/prior-year-tax-return-forms-and-schedules">here</a>.Or you can get a registered tax agent (like a&nbsp;<a target="_blank" href="https://www.ferrisfinancial.com.au/">tax accountant</a>,&nbsp;<a target="_blank" href="https://itp.com.au/">ITP The Income Tax Professionals</a>, or&nbsp;<a target="_blank" href="https://www.hrblock.com.au/">H&amp;R Block</a>) to&nbsp;lodge&nbsp;all&nbsp;years for you electronically, via their own (not-so) secret ATO portal for tax agents.And by the way, the tax pros have plenty of clients who are years behind on lodging their returns, so you’re unlikely to get a “HOW far behind??” look followed by a judgy side-eye from them either.Step 4: Get a rough idea of how shocking the bill is going to be<img src="https://ezycourse.b-cdn.net/4208/cmtmmjf9l3ikk01xx6ara6wm6.jpg" alt="image" style="height: auto; cursor: pointer;">A beast that’s defined is a beast you can start to prepare for battle with.The quick and dirty way to get some idea of the financial impact is to forget about deductions and rebates for now, and just work out how much income you had in each year. This would be personal income as well as business income.Then work out the tax on that income, at that year's tax rates.It's a&nbsp;very&nbsp;rough estimate, but at least then you have a starting point.Deductions will bring the number down.Refunds for years where you prepaid more tax than you ended up owing, will bring the number down.ATO penalties and interest will jack it back up. But one thing to be aware of here is that the ATO doesn't&nbsp;always&nbsp;apply penalties and interest to overdue returns. And even when it does, you may be able to have them reduced or cancelled.However, if you do have to pay penalties and interest, they can substantially increase what you owe. So the tax payable on your income could be only part of the total bill.Yeah, not gonna lie,&nbsp;it&nbsp;could&nbsp;get rough. But you might also be okay. So 'Nobody panic! Save the panic for when we really need it”.Step 5: Do your accountingThe next step is to do your accounting, so you can gather the numbers for your tax returns.Since I fix problems at source, and I’m lazy so I prefer to solve multiple problems with the same tool, I recommend you create 'an accounting record'. This is basically a transaction history for all the financial years you need to lodge a tax return, that’s then turned into the reports you need as a sole trader business owner – including the one for the tax man.It’s also useful to include the years for which you don’t need to lodge a return in this accounting record – because that one big, continuous financial database will come in handy long after all the tax returns have been lodged. It certainly has for me! I created mine because I was determined to never let my accounting get that out of control again. Seven years later, the smart spreadsheet and the system I built to keep it organised and up to date, are still serving me well, even when I get behind (because, four thousand other things I’d rather be doing than my accounting…)And besides, if you’re going to do a job, you might as well do the whole job, instead of half-arsing it.Your accounting record will give you the figures to get your tax returns lodged – which solves the immediate problem. It’ll also give you a financial database, to which you'll add transactions for this and future financial years, getting it correct from the start, so it never gets this out of control again. And you’ll learn a tonne in the process, that will make you so much more confident in handling this stuff in the future.Where to from here?<div style="display: flex;"><img src="https://ezycourse.b-cdn.net/4208/cmtmln6wg346z01y21nfbc0ba.jpg" alt="image" style="position: relative; width: 640px; height: auto; cursor: pointer; margin: 0px auto;"></div>“Yeah Anna, that’s great, but the reason I haven’t done my accounting – and then not lodged my tax returns – is because I don’t know how to do all that accounting stuff!”Don’t worry my little accounting baby, mama’s got you.If you’ve no idea where to start with creating that accounting record, simply go to the That Accounting Stuff website’s Courses menu, select Start Here, then click on the “I’m years behind on my tax returns – Help me get the ATO off my back” button, and we’ll show you the first two steps in your Accounting Hero’s Journey, that’ll help you get that accounting record done with the minimum amount of pain.Feeling Better?<div style="display: flex;"><img src="https://ezycourse.b-cdn.net/4208/cmtmmdbww3fy001zcby9kbafn.jpg" alt="image" style="position: relative; width: 595px; height: auto; cursor: pointer; margin: 0px auto;"></div>Feeling a bit better after having read all this? I hope so!The main things I want you to take away from this are:<ul style="margin-top: 0cm;"><li>You're NOT going to be sent to prison simply because you’re behind - even years or decades behind - on your tax returns. Failing to lodge is not the same thing as deliberately committing tax fraud or other serious offences. It’s not a crime to be overwhelmed and behind on admin.</li><li>As long as you're&nbsp;trying&nbsp;to do the right thing, the ATO is widely considered to be&nbsp;the best creditor you'll ever have.</li><li>You've got quite the journey ahead of you. But you're going to be a freakin' ninja once it's done. And you're going to be&nbsp;so damn impressed&nbsp;with yourself the day you hit Submit on that final overdue tax return, you have no idea... 😊 The moment I hit Submit on mine, I felt like a goddam Master of the Universe! Was so full of my clever, grown-up self I had to widen the doorways to fit my head through…</li><li>That Accounting Stuff&nbsp;is in your corner, and will help you as best we can.</li></ul>

Years Behind on your tax returns? Nobody panic! Save the panic for when we really need it.

What to Do if You’re Years Behind on Lodging Your Tax Returns

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What to Do if You’re Years Behind on Lodging Your Tax Returns

What to Do if You’re Years Behind on Lodging Your Tax Returns

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