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Ruling

Subject: Lodgment of income tax returns

Question

Are you required to lodge income tax returns for the years ended 30 June 2007 to 30 June 2011?

Answer

Yes.

This ruling applies for the following period

For years ended 30 June 2007 to 30 June 2011

The scheme commenced on

1 July 2006

Relevant facts

You have indicated that you are unable to lodge income tax returns for the years ended 30 June 2007 to 30 June 2011 because you do not have all your records. You can reconstruct your income and one of your expenses, but not your other expenses.

You can verify the majority of your weekly turnover. Your records were taken from your previous workplace.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 900-205

Reasons for decision

Every taxpayer carrying on a business must keep records that record and explain all transactions and other acts engaged in by the taxpayer that are relevant for tax purposes, including:

· any documents that are relevant for the purpose of ascertaining the taxpayer's income and expenditure; and

· documents containing particulars of any election, estimate, determination or calculation made by the taxpayer and the basis on which any estimate, determination or calculation was made.

All these documents must be kept even though, as a result of self assessment, they may not have to be actually lodged with a tax return.

Near the end of each financial year, the Commissioner issues a Legislative Instrument calling for the lodging of annual income tax returns. You are not in one of the categories that do not have to lodge a return. Individuals would normally be expected to lodge their return by 31 October each year unless they lodge through a tax agent, who has an extended lodgment period. You have not lodged income tax returns for the years ended 30 June 2007 through to 30 June 2011. You are saying that you lost some of your records part way through the 2010-11 financial year. This does not provide a reason why your returns were not lodged each year prior to this.

As stated above anybody carrying on a business has an obligation to keep the necessary records to be able to ascertain their income and expenditure. You have not lodged each year at the time you should have and would have had the necessary records available to you. If you had doubt as to what deductions you could claim you could have contacted our office at that time.

From a practical point of view, you still have to lodge income tax returns and have to lodge them as accurately as possible on what you have available to you.

You appear to have reasonably accurate records to reconstruct your income and one of your expenses. We would imagine that by doing the same thing for a period of four years you would have a good idea of the type of expenses that would be incurred in deriving this income. We would expect that your expenses would be fairly limited. Information is available on our website www.ato.gov.au outlining the type of expenses that can be claimed.

You should have access to bank records that would also help you reconstruct these figures. You have derived enough income to meet your living expenses (accommodation, food, travel, clothing, entertainment, electricity, phone, etc) and an estimate of this would give an idea of the minimum taxable income you had in these years.

You have not paid any tax through the Pay as You Go - Instalment system. A person carrying on a business would normally pay amounts during the year, to meet their liability at the end of the year. There would definitely be a tax liability based on the information you have provided and you should lodge income tax returns as accurately as possible to meet your obligations.