Dusting off the covers: old, outstanding individual income tax returns a burden on accountants

Accountants Daily spoke with Kaleb, who stressed that banks do not keep the information needed for individual income tax returns for more than about five years; he noted that all previous historical client details are contained on an old system that the ATO has access to.

In a statement provided to Accountants Daily, an ATO spokesperson told the masthead: "Tax returns for the 2013 income year and earlier must be lodged through a registered tax agent or by paper ... For tax agents assisting clients with historical or overdue tax returns, support is also available where the client is a new or re-engaged client."

"In these circumstances, agents may be able to access a New or Re-engaged Client lodgment deferral, which provides an additional six weeks to help bring the client's tax affairs back on track. Beyond these established lodgment concession arrangements, support is generally considered based on the individual circumstances of the client and their obligations."

"Where taxpayers no longer have records available for older income years, the ATO may be able to provide information it still holds to assist them in meeting their obligations. Our copies of tax documents request might be able to help taxpayers who don't have records from those years. Tax agents can lodge these on a client’s behalf."

To resolve the 20-year-old lodgments, Kaleb told the masthead that he was forced to ring the ATO and request this information to do the lodgment.

“The next issue is you can't go that far back on your software to lodge returns. So you have to access paper returns, which you can access online for those years.”

He stressed that this will bring about a burden for both clients and accountants. 

“It's going to cost the client more, because we have to access paper returns and fill in the forms manually. We can't do them on software, so it's gonna add to the cost of preparing the returns.

“We're already swamped. It’s only the start of the year, and we're already doing work for 2026. We're in the full swing of 2026 now, and we've got BASs due as well, and now we've got historical returns to worry about.

“It's just extra better work that's being created.”

Despite the burden, Kaleb said that not lodging these old outstanding lodgments will lead to further risks. 

“[It becomes] a problem when you go to apply for remissions of penalties and interest, because the ATO will look at outstanding lodgements; and they'll say, ‘well, you don't satisfy the criteria for remission because you've got outstanding lodgements’.”

The ATO spokesperson added: "The ATO supports taxpayers and registered tax agents to bring outstanding lodgment obligations up to date, regardless of how old those obligations may be."

"Where taxpayers no longer have records available for older income years, the ATO may be able to provide information it still holds to assist them in meeting their obligations. Our copies of tax documents request might be able to help taxpayers who don't have records from those years. Tax agents can lodge these on a client’s behalf," the spokesperson said.

Kaleb told the masthead that failing to lodge these old outstanding returns may snowball into criminal liability.

"While the ATO is committed to supporting taxpayers who engage and seek assistance, the community expects the ATO to take appropriate action where taxpayers fail to meet their obligations and do not engage," the spokesperson added.

“If you don't act, potentially, your client will receive a failure to lodge warning. Which can have legal implications down the track. If you ignore it, the ATO can prosecute you for outstanding lodgements; they can take you to court,” Kaleb said

“Don't ignore this; contact your client immediately and let them know that they are due and get in touch with the ATO and obtain the necessary information,” he concluded.

Editor's note: This story has been updated since publication.