The ATO has released a guide for tax professionals on default assessments for overdue tax returns. The guide outlines the process for the ATO in issuing default assessments including first issuing a default assessment warning letter (DAWL) and contact with the taxpayer or their tax agents.
The ATO said the taxable income of the taxpayer calculated in the default assessment takes into account various sources of information including:
- previously lodged tax returns or activity statements;
- income from financial institutions and government bodies;
- salary or wages from employer(s);
- GDP growth rate;
- small business benchmarks and ratios for the industry segment;
- taxation statistics published every year;
- any other relevant information available.
The ATO said tax professionals with clients who have been issued a DAWL should lodge any outstanding returns by the due date outlined in that letter.
The ATO warns that, where applicable, it will apply an administrative penalty of 75% of the tax-related liability. Further, it warns the administrative penalty may be increased by another 20% for repeat offenders, and failure to lodge on time penalties may also apply.
[LTN 97, 22/5]