I did my Australian taxes late. I’m now being charged a general interest charge on a $7.5k Higher Education Debt that didn’t exist at the time. Is there anything I can do? So my life fell apart for a few years (living arrangements, relationships, work, health - everything was a disaster). As a result I wasn’t able to get it together enough to do my taxes (from 2003/2004 till April this year). At the time I quit my job and went back to study.
Fast forward to now, I’m back on top of things so went back and submitted the 4 outstanding returns. Yay for me! I thought.
My HELP (Higher Education Loan Programme) debt in 2004 was about $200. In 2005 it was about $1.8k. Today it’s $7.5k. But when the ATO went through my tax return for the 2005 year, they applied the current HELP debt of $7.5k to that year, and slapped on a hefty general interest charge (around $3.8K). So all up my current liability to the tax office is $12 000, even though I’ve been a low income earner and student for all but one of these outstanding years.
It seems outrageous and unfair that a debt that accrued in the future, can be applied to the past, and that interest can then accrue on that debt.
I’ve been to 2 accountants already. The first said “sure it’s a bit mean, but the ato calculations are correct (HELP is not matched by year) and it will probably cost you more to have us fight this than to just pay it”.
The second said “you might be able to get out of the general interest charge, but only if you can prove you didn’t submit your returns as a result of a natural disaster, medical reasons (supported by GP) or inability to access records”.
Over those years I moved house a couple of times, went to various doctors many times, and saw a few counselors. But to chase up certificates/proof for all those little pieces of evidence seems unbearable. And I’m not sure that it will even stack up as a reasonable excuse.
Please help me hive mind - do I have any other options?
Original text: Can a future debt accure interest retrospectively?
October 15th, 2008 at 10:25 pm
Generally, taxpayers should call the ATO on 131142 for outstanding debts or difficulty paying. In your case, call us on 02 6216 1901 and we’ll do our best to help.