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  • Overview of behavioural penalties in 2020–21

    An analysis on the behavioural penalties originally imposed during 2020–21, including penalties remitted and reduced in 2020–21, and a summary of the latest available data. This analysis does not cover penalties imposed for failure to lodge.

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    Penalty insights

    Tax and super laws authorise us to impose penalties for a range of conduct where you did not take reasonable care or did not have a reasonably arguable position. Issuing penalties encourages taxpayers to comply with their tax obligations.

    The law specifies the conditions under which we apply a penalty and the amount of the penalty. However, we have discretion to waive (remit) the penalty depending on individual circumstances. The penalty may also be reduced through a review.

    Penalties imposed in 2020–21

    The following figure and table show the:

    • number of times we applied a penalty for a period
    • value of the penalties
    • value remitted at the time the penalty was imposed
    • value remitted after the time the penalty was imposed
    • value reduced by review after the time of imposition
    • the net penalty
    • the average net penalty.

    The value of remissions and reductions of penalties levied in 20202021 will progressively increase in future financial years as cases proceed through the objection and dispute resolution processes. This web content will be updated over time to reflect these reductions.

    Figure 1: Penalties imposed, remitted and reduced in 2020–21

    Figure 1 shows the penalties imposed, remitted and reduced in 2020-21.

    Table 1: Overview of penalties in 2020–21

    Measure

    2020–21

    Client experience: Privately Owned and Wealthy Groups and Public and Multinational Business

    All other client experiences (see note 1)

    Number of penalties imposed

    31,128

    1,496

    29,632

    Penalties imposed ($m)

    561.1

    333.6

    227.5

    Penalties remitted at the time the penalty was imposed ($m)

    47.3

    37.7

    9.6

    Penalties remitted after the time the penalty was imposed ($m) (see note 2)

    5.7

    3.4

    2.4

    Subsequent net reduction in penalty type ($m) (see note 2)

    0.3

    0.3

    0.0

    Net penalty outcome ($m)

    507.8

    292.2

    215.6

    Average net penalty outcome ($)

    16,312.88

    195,318.61

    7,275.61

    Due to rounding to the nearest $0.1 million, some totals may not correspond with the sum of the separate figures.


    Note 1: All other client experiences includes Small Business, Individuals, Self-Managed Superannuation Funds, Not-For-Profits: Charities, and APRA-Regulated Superannuation Funds.

    Note 2: The value of remissions and reductions of penalties levied in 20202021 will progressively increase in future financial years as cases proceed through the objection and dispute resolution processes. This web content will be updated over time to reflect these reductions.

    Table 1 shows that for these penalty types, we imposed 31,128 penalties, totalling $561.1 million in value. However, we then used our discretion to remit $47.3 million, or 8.4%, of these penalties at the time they were imposed.

    We frequently make remission decisions at the time the penalties are imposed, before we issue notices of your tax debt.

    We subsequently remitted $5.7 million with no change in penalty type, or 1%, and made subsequent reductions of $0.3 million due to a change in penalty type, or 0.1%, of penalties after the penalty notice was issued.

    Penalty types

    The most common types of penalties imposed were for:

    • intentional disregard of a taxation law
    • recklessness
    • failure to take reasonable care.

    These behaviours produced a shortfall. The penalties for these behaviours were on average lower than those applied to other behaviours where there was a shortfall, such as where taxpayers have taken positions that are not reasonably arguable or participated in schemes.

    Figure 2: Number of penalties imposed by penalty type in 2020–21

    Figure 2 shows the numbers of penalties imposed by penalty type in 2020-21.

    Figure 3: Net value of penalties (after remissions, reductions and cancellations) by penalty type in 2020–21

    Figure 3 shows the net value of penalties (after remissions, reductions and cancellations) by penalty type in 2020-21.

    Tax and program types

    We applied penalties to statements and positions for income tax, GST, stimulus, PAYG withholding, FTC, LCT, FBT and superannuation.

    Figure 4: Value of penalties imposed, remitted and reduced by tax and program type in 2020–21

    Figure 4 shows the value of penalties imposed, remitted and reduced by tax and program type in 2020-21.

    Table 2: Overview of penalties by tax and program type in 2020–21

    Penalty and program type

    Number

    Penalties imposed ($m)

    Penalties remitted at the of imposition ($m)

    Penalties remitted after the time of imposition ($m) (see note 3)

    Subsequent net reduction in penalty type ($m) (see note 3)

    Net penalty amount ($m)

    Income tax

    3,942

    420.3

    40.6

    4.4

    0.3

    375.0

    GST

    25,871

    123.3

    6.7

    1.1

    -

    115.5

    Stimulus

    725

    7.5

    -

    0.2

    -

    7.3

    PAYG withholding

    101

    5.5

    0.0

    0.0

    -

    5.4

    Fuel tax credits

    375

    2.5

    -

    0.0

    -

    2.5

    Luxury car tax

    27

    1.2

    -

    -

    -

    1.2

    Fringe benefits tax

    64

    0.8

    0.0

    -

    -

    0.8

    Superannuation

    5

    0.0

    -

    0.0

    -

    0.0

    Multiple: activity statement

    18

    0.0

    -

    -

    -

    0.0

    Due to rounding to the nearest $0.1 million, some totals may not correspond with the sum of the separate figures.


    Note 3: The value of remissions and reductions of penalties levied in 20202021 will progressively increase in future financial years as cases proceed through the objection and dispute resolution processes. This web content will be updated over time to reflect these reductions.

    Penalties for GST make up most of the penalties. This is followed by penalties for income tax, but the average value of income tax penalties is much higher than GST penalties.

    Penalties are applied on per period basis. Activity statements are typically for monthly or quarterly periods, whereas income tax applies to a financial year. The difference in the frequency of these periods is the main reason for the larger number of GST penalties compared to income tax penalties.

    Client experience

    The following graph and table show the breakdown of penalties imposed, remitted and reductions by client experience (ordered by net penalty amount).

    Figure 5: Value of penalties imposed, remitted and reduced by client experience in 2020–21

    Figure 5 shows the value of penalties imposed, remitted and reduced by the client experience in 2020-21.

    Table 3: Overview of penalties by client experience in 2020–21

    Client experience

    Number

    Penalties imposed ($m)

    Penalties remitted at the time of imposition ($m)

    Penalties remitted after the time of imposition ($m) (see note 4)

    Subsequent net reduction (increase) in penalty type ($m) (see note 4)

    Net penalty amount ($m)

    Privately Owned and Wealthy Groups

    1,124

    189.3

    2.0

    3.4

    0.3

    183.6

    Small Business

    27,293

    191.9

    6.9

    1.7

    (0.0)

    183.4

    Public and Multinational Business

    372

    144.3

    35.7

    -

    0.0

    108.5

    Individuals

    2,218

    24.5

    1.8

    0.5

    0.0

    22.3

    Self-Managed Superannuation Funds

    63

    10.5

    0.9

    0.0

    -

    9.6

    Not-For-Profits: Charities

    55

    0.3

    0.0

    0.0

    -

    0.3

    APRA-Regulated Superannuation Funds

    3

    0.3

    -

    0.2

    -

    0.0

    Due to rounding to the nearest $0.1 million, some totals may not correspond with the sum of the separate figures.


    Note 4: The value of remissions and reductions of penalties levied in 20202021 will progressively increase in future financial years as penalty decisions proceed through the objection and dispute resolution processes. This web content will be updated over time to reflect these reductions.

    Measuring penalties

    Like our total revenue effects measure, we use primary sources of information to measure penalties.

    Primary sources of information

    The value of penalties imposed and remitted is calculated based on each taxpayer's transactional record. We use broader indicators of each taxpayer's overall tax and super affairs to assign a primary client experience.

    See also:

      Last modified: 29 Sep 2021QC 66872