The saying 'better late than never' doesn't apply to your tax return, says New Idea's finance expert, David Koch.

Q. How serious is it if you don't put in a tax return on time? For the past 10 years I've used tax agents and have always ended up doing two years at a time. I don't usually have problems, but I missed the April tax agent's deadline a few months ago and I may owe a bit more money this year - something that hasn't happened in the past. How serious is this? I'll get around to it eventually.
Time Poor, Neutral Bay, NSW.

A. When it comes to your yearly tax return, the Australian Tax Office is starting to get serious. Earlier this year former AFL star Robert 'Dipper' DiPierdomenico was convicted and fined $2000 for not lodging a series of tax returns, even though he was owed a refund. It's a timely reminder for those who do their own tax returns that you must have your 2006 to 2007 tax return lodged by October 31 or you'll face a fine and possible conviction.

File or be fined
Failure to lodge a tax return is breaking the law, but it's always been believed the ATO will be lenient on those who are owed a tax refund. Well, not anymore. Dipper wasn't being accused of tax evasion and was actually owed a tax return of $11,033.
Instead he was charged for failure to lodge five end-of-year tax returns between 1996 and 2000, and another one for 2005.

But I'm too busy!
Dipper told the court how he looked after his own financial affairs and had become swamped by extensive business and charity commitments since retiring from football in 1991. But he's not alone. Former Prime Minister Paul Keating was caught out for late lodgement, saying that he was just too busy to do them. Judging by the majority of people who I've discussed this with recently, you're not alone if you're in the same boat.

VIP tax dates
To submit your own tax return you must lodge either a tax pack or e-tax (on the web) by October 31 each year. If your tax return is lodged through an accountant or agent, there may be an extension, which they've come to an agreement on with the ATO. Many can have until March of the following year the lodgement is due.

Tardy tax fines
Late fines do apply which can range from $110 to $550 if you lodge within four months after the due date, after that period you're looking at anywhere from $550 to $2750. If you're actually found to be avoiding paying tax, then a whole new range of financial and legal penalties will apply to you. But the real sting in late lodgement penalties is the conviction - which can make it difficult to travel to certain countries or hold corporate and public official positions.

Front up now
If you've got away without lodging a tax return for a few years, it'd be easy to think they've forgotten about you. The ATO will be a lot nicer if you front up to them now rather than when they've tracked you down. Given the sophistication of their processes, it's really only a matter of time before they'll catch up with you. One way is through the current system where every Australian bank sends the ATO a list of their customers' details and the interest earned on each account, which is checked against individual tax returns.

Tax tips
The ATO follows the purchase of things like boats and cars and then matches them against tax returns to see if the buyer can afford it. This is one of the most effective strategies they have to track down those not declaring or hiding their income.
The system works automatically to identify sales of expensive boats and cars and then cross-check them against the buyer's tax return to see if they can afford the big purchase. If it doesn't match up, then they send out the investigators. Your biggest mistake would be to underestimate the computing power of the ATO and their ability to garner information on your assets.

Then there's the annual ATO targets for catching industries that are notoriously tardy with their tax. In the past they've looked closely at builders, car repairers, fishermen and even a handful of teachers. A good example of this was found in a recent discovery that identified only 70 per cent of barristers and just 56 per cent of lawyers admitted in their yearly tax returns that they've earned enough to be in the top tax bracket. Hard to believe, but it's true.

Do you have a finance question for David Koch to answer in New Idea magazine? CLICK HERE TO SEND DAVID KOCH YOUR QUESTION