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If you have not filed your tax returns in years, here's how to file them.

 You could be facing severe financial penalties and even jail if you fail to file your tax return. You could also be missing out on a substantial amount of cash.

Tax time is upon us. If you have not filed your tax returns in previous years, now is the time to do so.

Australians could face an $1100 fine and $8500 penalty if Australia's Taxation Office prosecutes them for failing to file their tax returns.Anybody earning more than $18,200 is required to file a tax return. Most people do the right things. However, according to Tim Loh, the ATO assistant commissioner, the best advice for taxpayers who have outstanding returns is to bring them up-to-date as soon as possible. There's a good reason too. He said that four out of five Australians receive a refund. If you don't file a claim, you might be missing out on the money you could have back in your pocket." news.com.au.


"We recognize that sometimes people don't fulfil their lodgement obligations on time, even with the best intentions. We encourage taxpayers who are worried about not being able to lodge on time or have missed the due date to contact us immediately to discuss their options."


What happens to files?


Mark Chapman, H&R Block's director for tax communications, said that if a taxpayer fails to file a tax return by the due date, the ATO will first impose a Failure To Lodge (FTL) penalty. This ranges from $222 to $1100. He said that the penalty is usually applied automatically but not generally used for returns with a null result or generate returns.


"When a penalty has been applied, the ATO may sometimes remit it where it's fair and reasonable to do so. For example, in the case of a natural disaster or serious illness."

He warned, however, that if a taxpayer fails to file a return for several years, significantly, the ATO may issue one or more default assessments to the taxpayer. He stated that this was essentially an estimate of the taxpayer's income, based upon data held by ATO about the taxpayer and similar taxpayers.


"Because these assessments were estimated, they are seldom entirely accurate and often show a higher taxpayer's tax liability than they owe. They usually don't account for items like deductions.


Taxpayers have the right to appeal against default assessments, but they must also show their tax liability. He added that just arguing that the ATO's numbers are incorrect is not sufficient. According to Mr Chapman, it is widely believed that late taxpayers are more likely to be reviewed or audited at the ATO.


RELATED: How to handle late or missing tax returns




How to make your taxes more affordable


Mr Loh said that people could file returns via their myGov accounts from the 2013-14 income tax year. The ATO will prefill any information you have, and they are available to all. He said, "If there are outstanding lodgements from 2013-14, we can check if any information is available to assist you in lodgements."


"You might have outstanding returns over years that you weren't required to lodge. In this instance, you can submit a non-lodgement advisory through ATO Online Services."

He said that penalties for non-lodgement might vary depending on your history and severity. However, there are options to manage and create payment plans if you have tax owing.


Mr Chapman warned that if you are behind on one or more tax returns, ATO will get in touch with you and take action. You can prevent this by ensuring that your tax returns are up-to-date. The process of catching up can be made as easy as possible by your tax agent. He said that if can remit penalties, the tax agent will present a case for you at the ATO.


"If there is missing income information, they may be able to fill in the gaps with prefilled information that has been sent to the ATO from third parties like banks or employers. They will help you determine what you are entitled to if you don't keep records of deductions.

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