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A New Tax System (Tax Administration) Bill (No. 2) 2000
Schedule 1 Administrative penalties

   

Taxation Administration Act 1953

1  Section 265-70 in Schedule 1 (link note)

Omit “288”, substitute “284”.

2  Before Division 288 in Schedule 1

Insert:

Division 284 Administrative penalties for statements, unarguable positions and schemes

Table of Subdivisions

             Guide to Division 284

284-A   General provisions

284-B    Penalties relating to statements

284-C    Penalties relating to schemes

284-D   Provisions common to Subdivisions 284-B and 284-C

Guide to Division 284

284-5   What this Division is about

This Division sets out the circumstances in which administrative penalties apply for:

               (a)     making false or misleading statements; and

              (b)     taking a position that is not reasonably arguable; and

               (c)     entering into schemes.

It also sets out the amounts of those penalties.

Subdivision 284-A General provisions

Table of sections

284-10      Object of Division

284-15      When a matter is reasonably arguable

284-20      Which statements this Division applies to

284-25      Statements by agents

284-30      Application of Division to trusts

284-35      Application of Division to partnerships

284-10   Object of Division

                   The object of this Division is to provide a uniform administrative penalty regime for all * taxation laws to enable administrative penalties to apply to entities that fail to meet their obligations under those laws in relation to:

                     (a)  making false or misleading statements; and

                     (b)  taking a position that is not reasonably arguable; and

                     (c)  entering into * schemes; and

                     (d)  refusing to provide documents to the Commissioner; and

                     (e)  disregarding * private rulings.

284-15   When a matter is reasonably arguable

             (1)  A matter is reasonably arguable if it would be concluded in the circumstances, having regard to relevant authorities, that what is argued for is as likely to be correct as incorrect, or is more likely to be correct than incorrect.

             (2)  To the extent that a matter involves an assumption about the way in which the Commissioner will exercise a discretion, the matter is only reasonably arguable if, had the Commissioner exercised the discretion in the way assumed, a court would be as likely as not to decide that the exercise of the discretion was in accordance with law.

             (3)  Without limiting subsection (1), these authorities are relevant:

                     (a)  a * taxation law;

                     (b)  material for the purposes of subsection 15AB(1) of the Acts Interpretation Act 1901 ;

                     (c)  a decision of a court (whether or not an Australian court), the * AAT or a Board of Review;

                     (d)  a public ruling within the meaning of Part IVAAA.

284-20   Which statements this Division applies to

                   This Division applies to a statement made orally, in a document or in any other way (including electronically) for a purpose connected with a * taxation law.

284-25   Statements by agents

                   This Division applies to a statement made in an * approved form by your agent as if it had been made by you.

284-30   Application of Division to trusts

                   If you are a trustee of a trust and:

                     (a)  you make a statement to the Commissioner or to an officer who is exercising powers or performing functions under a * taxation law about the trust; and

                     (b)  the statement:

                              (i)  is false or misleading in a material particular, whether because of things in it or omitted from it; or

                             (ii)  treated an * income tax law as applying to a matter or identical matters in a particular way that was not * reasonably arguable; or

                            (iii)  treated a taxation law as applying in a particular way to a * scheme;

this Division applies to you as if any * shortfall amount or * scheme shortfall amount of a beneficiary of the trust as a result of the statement were your shortfall amount or scheme shortfall amount.

284-35   Application of Division to partnerships

             (1)  If you are a partner in a partnership and:

                     (a)  a statement about the partnership net income or partnership loss is made by a partner or the partnership’s agent to the Commissioner or to an entity who is exercising powers or performing functions under a * taxation law about the partnership; and

                     (b)  the statement:

                              (i)  is false or misleading in a material particular, whether because of things in it or omitted from it; or

                             (ii)  treated an * income tax law as applying to a matter or identical matters in a particular way that was not * reasonably arguable;

this Division applies to you as if you had made the statement.

             (2)  If you are a partner in a partnership and:

                     (a)  the partnership participated in a * scheme; and

                     (b)  the partnership net income would have been greater, or the partnership loss would have been smaller, apart from the scheme;

this Division applies to you as if the proportion of the * scheme benefit that is the same as your share of the partnership net income or partnership loss were your scheme benefit.

Subdivision 284-B Penalties relating to statements

Guide to Subdivision 284-B

284-70   What this Subdivision is about

You are liable to an administrative penalty if:

               (a)     you make a false or misleading statement about a tax-related matter; or

              (b)     you take a position that is not reasonably arguable about a tax-related matter; or

               (c)     the Commissioner determines a tax-related liability of yours without documents you were required to provide; or

              (d)     you do not follow a private ruling about a tax-related matter.

This Subdivision sets out when the penalties apply and how the amounts of the penalties are calculated.

Table of sections

Operative provisions

284-75      Liability to penalty

284-80      Shortfall amounts

284-85      Amount of penalty

284-90      Base penalty amount

Operative provisions

284-75   Liability to penalty

             (1)  You are liable to an administrative penalty if:

                     (a)  you or your agent makes a statement to the Commissioner or to an entity that is exercising powers or performing functions under a * taxation law; and

                     (b)  the statement is false or misleading in a material particular, whether because of things in it or omitted from it; and

                     (c)  you have a * shortfall amount as a result of the statement.

             (2)  You are liable to an administrative penalty if:

                     (a)  you or your agent makes a statement to the Commissioner or to an entity that is exercising powers or performing functions under an * income tax law; and

                     (b)  in the statement, you or your agent treated an * income tax law as applying to a matter or identical matters in a particular way that was not * reasonably arguable; and

                     (c)  you have a * shortfall amount as a result of the statement; and

                     (d)  item 4, 5 or 6 of the table in subsection 284-90(1) applies to you.

             (3)  You are liable to an administrative penalty if:

                     (a)  you fail to give a return, notice or other document to the Commissioner by the day it is required to be given; and

                     (b)  that document is necessary for the Commissioner to determine a * tax-related liability of yours accurately; and

                     (c)  the Commissioner determines the tax-related liability without the assistance of that document.

Note:          You are also liable to an administrative penalty for failing to give the document on time: see Subdivision 286-C.

             (4)  You are liable to an administrative penalty if:

                     (a)  a * private ruling has been made about the way in which a * taxation law applies to you; and

                     (b)  after the ruling was made, you make a statement to the Commissioner treating that law as applying to you in a different way; and

                     (c)  you have a * shortfall amount as a result of the statement.

284-80   Shortfall amounts

                   You have a shortfall amount if an item in this table applies to you. That amount is the amount by which the relevant liability, or the payment or credit, is less than or more than it would otherwise have been.

 

Shortfall amounts

Item

You have a shortfall amount in this situation:

1

A * tax-related liability of yours for an accounting period, or for a * taxable importation, worked out on the basis of the statement is less than it would be if the statement were not false or misleading

2

An amount that the Commissioner must pay or credit to you under a * taxation law for an accounting period, or under a tourist refund scheme under Division 168 of the * GST Act or Division 25 of the A New Tax System (Wine Equalisation Tax) Act 1999 , worked out on the basis of the statement is more than it would be if the statement were not false or misleading

3

A * tax-related liability of yours for an accounting period worked out on the basis of the statement is less than it would be if the statement did not treat an * income tax law as applying in a way that was not * reasonably arguable

4

An amount that the Commissioner must pay or credit to you under an * income tax law for an accounting period worked out on the basis of the statement is more than it would be if the statement did not treat an * income tax law as applying in a way that was not * reasonably arguable

5

A * tax-related liability of yours for an accounting period worked out on the basis of the statement is less than it would be if the statement were consistent with the * private ruling

6

An amount that the Commissioner must pay or credit to you under a * taxation law for an accounting period worked out on the basis of the statement is more than it would be if the statement were consistent with the * private ruling

Note:          Section 284-215 may reduce or eliminate your shortfall amount.

284-85   Amount of penalty

             (1)  Work out the * base penalty amount under section 284-90. If the base penalty amount is not increased under section 284-220 or reduced under section 284-225, this is the amount of the penalty.

             (2)  Otherwise, use this formula:

where:

BPA is the * base penalty amount.

increase % is the percentage increase (if any) under section 284-220.

reduction % is the percentage reduction (if any) under section 284-225.

284-90   Base penalty amount

             (1)  The base penalty amount under this Subdivision is worked out using this table:

 

Base penalty amount

Item

In this situation:

The base penalty amount is:

1

Your * shortfall amount or part of it resulted from intentional disregard of a * taxation law by you or your agent

75% of your * shortfall amount or part

2

Your * shortfall amount or part of it resulted from recklessness by you or your agent as to the operation of a * taxation law

50% of your * shortfall amount or part

3

Your * shortfall amount or part of it resulted from a failure by you or your agent to take reasonable care to comply with a * taxation law

25% of your * shortfall amount or part

4

Your * shortfall amount or part of it resulted from you or your agent treating an * income tax law as applying to a matter or identical matters in a particular way that was not * reasonably arguable, and that amount is more than the greater of $10,000 or 1% of the income tax payable by you for the income year, worked out on the basis of your * income tax return

25% of your * shortfall amount or part

5

You have a * shortfall amount because of section 284-30 (about trusts) and:

(a) your shortfall amount or part of it resulted from you or your agent treating an * income tax law as applying to a matter or identical matters in a particular way that was not * reasonably arguable; and

(b) because of that treatment, the trust’s net income would have been reduced, or the trust’s * tax loss would have been increased, for the income year by more than the greater of $20,000 or 2% of the trust’s net income (if any) for that year worked out on the basis of the trust’s * income tax return

25% of your * shortfall amount or part

6

You have a * shortfall amount because of section 284-35 (about partnerships) and:

(a) your shortfall amount or part of it resulted from you or your agent treating an * income tax law as applying to a matter or identical matters in a particular way that was not * reasonably arguable; and

(b) because of that treatment, the partnership net income would have been reduced, or the partnership loss would have been increased, for the income year by more than the greater of $20,000 or 2% of the partnership net income (if any) for that year, worked out on the basis of the partnership’s * income tax return

25% of your * shortfall amount or part

7

You are liable to an administrative penalty under subsection 284-75(3)

75% of the tax-related liability concerned

8

Your * shortfall amount or part of it resulted you or your agent disregarding a * private ruling

25% of your * shortfall amount or part

Note:          Section 284-215 may reduce or eliminate your shortfall amount.

             (2)  If 2 or more items in that table apply to you for your * shortfall amount or a part of it and one of them produces a greater * base penalty amount than any of the others, use that item.

Subdivision 284-C Penalties relating to schemes

Guide to Subdivision 284-C

284-140   What this Subdivision is about

You are liable to an administrative penalty if you attempt to reduce your tax-related liabilities or increase your credits through a scheme.

This Subdivision sets out when the penalties apply and how the amounts of the penalties are calculated.

Table of sections

Operative provisions

284-145    Liability to penalty

284-150    Scheme benefits and scheme shortfall amounts

284-155    Amount of penalty

284-160    Base penalty amount : schemes

Operative provisions

284-145   Liability to penalty

             (1)  You are liable to an administrative penalty if:

                     (a)  you would, apart from a provision of a * taxation law or action taken under such a provision (the adjustment provision ), get a * scheme benefit from a * scheme; and

                     (b)  having regard to any relevant matters, it is reasonable to conclude that:

                              (i)  an entity that (alone or with others) entered into or carried out the scheme, or part of it, did so with the sole or dominant purpose of that entity or another entity getting a scheme benefit from the scheme; or

                             (ii)  for a scheme referred to in Division 165 of the A New Tax System (Goods and Services Tax) Act 1999 —the principal effect of the scheme, or of part of the scheme, is that you would, apart from the adjustment provision, get the scheme benefit from the scheme directly or indirectly.

             (2)  You are also liable to an administrative penalty if:

                     (a)  you would, apart from section 136AD or 136AE of the Income Tax Assessment Act 1936 , or the application of the International Tax Agreements Act 1953 to those sections, (also the adjustment provision ) get a * scheme benefit from a * scheme; and

                     (b)  subparagraph (1)(b)(i) is not satisfied for the scheme.

             (3)  It does not matter whether the * scheme, or any part of the scheme, was entered into or carried out inside or outside Australia.

284-150   Scheme benefits and scheme shortfall amounts

             (1)  An entity gets a scheme benefit from a * scheme if:

                     (a)  a * tax-related liability of the entity for an accounting period is, or could reasonably be expected to be, less than it would be apart from the scheme or a part of the scheme; or

                     (b)  an amount that the Commissioner must pay or credit to the entity under a * taxation law for an accounting period is, or could reasonably be expected to be, more than it would be apart from the scheme or a part of the scheme.

             (2)  The amount of the * scheme benefit that you would, apart from the adjustment provision, have got from the * scheme is called your scheme shortfall amount .

Note:          Section 284-215 may reduce or eliminate your scheme shortfall amount.

284-155   Amount of penalty

             (1)  Work out the * base penalty amount under section 284-160. If the base penalty amount is not increased under section 284-220 or reduced under section 284-225, this is the amount of the penalty.

             (2)  Otherwise, use this formula:

where:

BPA is the * base penalty amount.

increase % is the percentage increase (if any) under section 284-220.

reduction % is the percentage reduction (if any) under section 284-225.

284-160   Base penalty amount : schemes

                   The base penalty amount for a * scheme is:

                     (a)  for a scheme to which subsection 284-145(1) applies:

                              (i)  50% of your * scheme shortfall amount; or

                             (ii)  25% of your scheme shortfall amount if it is * reasonably arguable that the adjustment provision does not apply; or

                     (b)  for a scheme to which subsection 284-145(2) applies:

                              (i)  25% of your * scheme shortfall amount; or

                             (ii)  10% of your scheme shortfall amount if it is * reasonably arguable that the adjustment provision does not apply.

Note:          Section 284-215 may reduce or eliminate your scheme shortfall amount.

Subdivision 284-D Provisions common to Subdivisions 284-B and 284-C

Table of sections

284-215    Exceptions

284-220    Increase in base penalty amount

284-225    Reduction of base penalty amount

284-215   Exceptions

             (1)  If, apart from this section, you would have a * shortfall amount or a * scheme shortfall amount for an accounting period and:

                     (a)  your shortfall amount or scheme shortfall amount, or part of it, was caused by you or your agent treating a * taxation law as applying in a particular way; and

                     (b)  that way agrees with:

                              (i)  advice given to you or your agent by or on behalf of the Commissioner; or

                             (ii)  general administrative practice under that law; or

                            (iii)  a statement in a publication approved in writing by the Commissioner;

your shortfall amount or scheme shortfall amount is reduced to the extent that it was caused by that treatment.

             (2)  For the purposes of determining whether you are liable to an administrative penalty, you do not have a * shortfall amount as a result of a statement that is false or misleading in a material particular to the extent that you and your agent (if any) took reasonable care in making the statement.

             (3)  You do not have a * shortfall amount as a result of a statement referred to in subsection 284-75(4) to the extent that an order of a court or a decision of the * AAT supports the way you treated the * taxation law as applying.

Note:          Subsection 284-75(4) deals with statements contrary to private rulings.

284-220   Increase in base penalty amount

             (1)  The * base penalty amount for your * shortfall amount, or for part of it, for an accounting period is increased by 20% if:

                     (a)  you took steps to prevent or obstruct the Commissioner from finding out about the shortfall amount; or

                     (b)  you became aware of the shortfall amount or part after a statement had been made to the Commissioner about the relevant * tax-related liability and you did not tell the Commissioner about it within a reasonable time; or

                     (c)  the base penalty amount was worked out using item 1, 2 or 3 of the table in subsection 284-90(1) and a base penalty amount for you was worked out under one of those items for a previous accounting period; or

                     (d)  the base penalty amount was worked out using item 4, 5, 6 or 8 of that table and a base penalty amount for you was worked out under that item for a previous accounting period; or

                     (e)  your liability to a penalty arises under subsection 284-75(3) and you were liable to a penalty under that subsection for a previous accounting period.

             (2)  The * base penalty amount for your * scheme shortfall amount, or for part of it, for an accounting period is increased by 20% if:

                     (a)  you took steps to prevent or obstruct the Commissioner from finding out about the scheme shortfall amount or the part; or

                     (b)  a base penalty amount for you was worked out under section 284-160 for a previous accounting period.

284-225   Reduction of base penalty amount

             (1)  The * base penalty amount for your * shortfall amount or * scheme shortfall amount, or for part of it, for an accounting period is reduced by 20% if:

                     (a)  the Commissioner tells you that a * tax audit is to be conducted of your financial affairs for that period or a period that includes that period; and

                     (b)  after that time, you voluntarily tell the Commissioner, in the * approved form, about the shortfall or the part of it; and

                     (c)  telling the Commissioner can reasonably be estimated to have saved the Commissioner a significant amount of time or significant resources in the audit.

             (2)  The * base penalty amount for your * shortfall amount or * scheme shortfall amount, or for part of it, for an accounting period is reduced under subsection (3) or (4) if you voluntarily tell the Commissioner, in the * approved form, about the shortfall amount or the part of it before the earlier of:

                     (a)  the day the Commissioner tells you that a * tax audit is to be conducted of your financial affairs for that period or a period that includes that period; or

                     (b)  if the Commissioner makes a public statement requesting entities to make a voluntary disclosure by a particular day about a * scheme or transaction that applies to your financial affairs—that day.

             (3)  The * base penalty amount for your * shortfall amount, or for part of it, is:

                     (a)  reduced by 80% if the shortfall amount, or the part of, it is $1,000 or more; or

                     (b)  reduced to nil if the shortfall amount, or the part of it, is less than $1,000.

             (4)  The * base penalty amount for your * scheme shortfall amount, or for part of it, is reduced by 80%.

             (5)  If you voluntarily tell the Commissioner, in the * approved form, about your * shortfall amount or * scheme shortfall amount, or part of it, after the Commissioner tells you that a * tax audit is to be conducted of your financial affairs, the Commissioner may treat you as having done so before being told about the audit if the Commissioner considers it appropriate to do so in the circumstances.

Division 286 Penalties for failing to lodge documents on time

Table of Subdivisions

286-A   Guide to Division 286

286-B    Object of Division

286-C    Penalties for failing to lodge documents on time

Subdivision 286-A Guide to Division 286

286-1   What this Division is about

You are liable to an administrative penalty if you are required to give a return, statement, notice or other document to the Commissioner by a particular time and you do not do so.

This Division sets out when the penalty applies and how the amounts of the penalty are calculated.

Subdivision 286-B Object of Division

Table of sections

286-25      Object of Division

286-25   Object of Division

                   The object of this Division is to provide a uniform administrative penalty regime for all * taxation laws to enable administrative penalties to apply for failure to give returns, notices, statements or other documents to the Commissioner on time.

Subdivision 286-C Penalties for failing to lodge documents on time

Table of sections

286-75      Liability to penalty

286-80      Amount of penalty

286-75   Liability to penalty

             (1)  You are liable to an administrative penalty if:

                     (a)  you are required under a * taxation law to give a return, notice, statement or other document to the Commissioner in the * approved form by a particular day; and

                     (b)  you do not give the return, notice, statement or document to the Commissioner in the approved form by that day.

             (2)  Subsection (1) does not apply to a return, notice, statement or other document under any of these Acts:

                     (a)  the Superannuation Contributions Tax (Assessment and Collection) Act 1997 ;

                     (b)  the Superannuation Guarantee (Administration) Act 1992 ; or

                     (c)  the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991 .

286-80   Amount of penalty

             (1)  The amount of the penalty is worked out in this way:

                     (a)  work out the * base penalty amount under subsection (2); and

                     (b)  work out whether the base penalty amount is increased under subsection (3) or (4).

             (2)  The base penalty amount for failing to lodge a return, notice or other document on time or in the * approved form is 1 penalty unit for each period of 28 days or part of a period of 28 days starting on the day when the document is due and ending when you give it to the Commissioner (up to a maximum of 5 penalty units).

Note:          See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Example:    An entity lodges a return 31 days late. The base penalty amount under subsection (2) is 2 penalty units.

             (3)  The * base penalty amount is multiplied by 2 if:

                     (a)  the entity concerned is a * medium withholder for the month in which the return, notice or other document was required to be given; or

                     (b)  the entity’s assessable income for the income year in which the return, notice or other document is required to be given is more than $1 million but less than $20 million; or

                     (c)  the entity’s * current annual turnover worked out at a time in the month in which the return, notice or other document was required to be given is more than $1 million but less than $20 million.

             (4)  The * base penalty amount is multiplied by 5 if:

                     (a)  the entity concerned is a * large withholder for the month when the return, notice or other document was required to be given; or

                     (b)  the entity’s assessable income for the income year in which the return, notice or other document is required to be given is $20 million or more; or

                     (c)  the entity’s * current annual turnover worked out at a time in the month in which the return, notice or other document was required to be given is $20 million or more.

             (5)  In working out the * base penalty amount, the amount of a penalty unit is the amount applying at the start of the relevant 28 day period.

             (6)  The fact that you have not yet lodged the relevant return, notice or other document does not prevent the Commissioner notifying you that you are liable to an administrative penalty under this Subdivision. That penalty may be later increased under this section.

Note:          The Commissioner is required to notify you of an administrative penalty: see section 298-10.

3  Transitional

(1)       Section 284-220 in Schedule 1 to the Taxation Administration Act 1953 has effect as if a reference in paragraph (1)(c) or (d) of that section to an item specified in this table included a reference to the corresponding provision of the Income Tax Assessment Act 1936 .

 

1936 Act equivalent of certain items

Item

Schedule 1 provision

1936 Act provision

1

Item 1 in the table in subsection 284-90(1) in Schedule 1 to the Taxation Administration Act 1953

Section 226J

2

Item 2 in that table

Section 226H

3

Item 3 in that table

Section 226G

4

Item 4 in that table

Section 226K

5

Item 5 in that table

Section 226S

6

Item 6 in that table

Section 226P

7

Item 8 in that table

Section 226M

(2)       Section 284-220 in Schedule 1 to the Taxation Administration Act 1953 has effect as if the reference in subsection 284-220(2) to section 284-160 in that Schedule included a reference to section 224, 225, 226 or 226AA of the Income Tax Assessment Act 1936 .

4  Application of amendments

(1)       Subject to this item, the amendments made by this Schedule apply to things done on or after 1 July 2000.

(2)       For fringe benefits tax, those amendments apply to fringe benefits tax, and to things done, for the year of tax starting on 1 April 2001 and later years.

(3)       Those amendments do not apply to a return, statement, notice or other document, or a statement made or scheme entered into, in relation to:

                     (a)  for income tax—the 1999-2000 income year or an earlier income year; or

                     (b)  for fringe benefits tax—the year of tax starting on 1 April 2000 or an earlier year of tax; or

                     (c)  for other taxes—the year starting on 1 July 1999 or an earlier year.