Overview of behavioural penalties
Overview of penalties for statements, schemes and positions not reasonably arguable for previous and current years.
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Penalty insights
This analysis covers behavioural penalties imposed in the previous and current financial years, including those remitted and reduced, and a summary of the latest available data.
This analysis does not cover penalties imposed for failure to lodge.
When we impose penalties
Tax and super laws authorise us to impose penalties for a range of conduct where you did not:
- take reasonable care
- 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.
What penalties we impose
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
- net penalty in year of imposition
- net penalty in year after imposition
- average net penalty.
The value of remissions and reductions of penalties levied will progressively increase as cases proceed through the objection and dispute resolution processes. We will update this content to reflect these reductions.
Figure 1: Penalties imposed, remitted and reduced in 2020–21 and 2021–22
Table 1: Overview of penalties in 2020–21 and 2021–22
Measure
|
Previous financial year
|
Client experience: Privately Owned and Wealthy Groups and Public and Multinational Business
|
All other client experiences (see note 1)
|
Current financial year
|
Client experience: Privately Owned and Wealthy Groups and Public and Multinational Business
|
All other client experiences (see note 1)
|
Year of imposition
|
Number of penalties imposed
|
31,128
|
1,605
|
29,523
|
12,547
|
2,553
|
9,994
|
Penalties imposed ($m)
|
561.1
|
326.3
|
234.8
|
1,524.3
|
1,239.4
|
284.9
|
Penalties remitted at the time the penalty was imposed ($m)
|
47.7
|
37.2
|
10.5
|
103.5
|
86.1
|
17.4
|
Penalties remitted after the time the penalty was imposed ($m) (see note 2)
|
5.3
|
3.5
|
1.9
|
23.6
|
1.0
|
22.7
|
Subsequent net reduction in penalty type ($m) (see note 2)
|
0.3
|
0.3
|
0.0
|
0.2
|
-
|
0.2
|
Net penalty outcome ($m)
|
507.8
|
285.3
|
222.5
|
1,397.1
|
1,152.4
|
244.6
|
Average net penalty outcome ($)
|
16,312.81
|
177,746.32
|
7,536.57
|
111,346.97
|
451,401.49
|
24,478.94
|
Year after imposition
|
Net additions (detractions) in net penalty outcome ($m)
|
8.2
|
(1.5)
|
9.7
|
-
|
-
|
-
|
Net penalty outcome ($m)
|
516.0
|
283.8
|
232.2
|
-
|
-
|
-
|
Average net penalty outcome ($)
|
16,576.35
|
176,822.71
|
7,864.65
|
-
|
-
|
-
|
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 super funds, not-for-profits: charities, and APRA-regulated super funds.
Note 2: The value of remissions and reductions of penalties levied in 2020–21 and 2021–22 will progressively increase in future financial years as cases proceed through the objection and dispute resolution processes. We will update this content to reflect these reductions.
We often make remission decisions when penalties are imposed, before we issue notices of your tax debt.
Table 1 shows that in the previous financial year, we imposed 31,128 penalties, totalling $561.1 million. However, we used our discretion to remit $47.7 million, or 8.5%, when they were imposed.
We remitted $5.3 million, or 1%, with no change in penalty type. We also made reductions of $0.3 million, or 0.1%, due to a change in penalty type after the penalty notice was issued.
We made further changes to these penalties in the current financial year, resulting in a net increase of $8.2 million.
For the current financial year, we imposed 12,547 penalties, totalling $1,524.3 million. However, we used our discretion to remit $103.5 million, or 6.8%, when they were imposed.
We remitted $23.6 million, or 1.6%, with no change in penalty type. We also made reductions of $0.2 million, or 0.0%, due to a change in penalty type after the penalty notice was issued.
Penalty types
The most common types of penalties we imposed in the current financial year were for:
- recklessness
- intentional disregard of a taxation law
- failure to take reasonable care.
These behaviours produced a shortfall. The penalties for these behaviours were on average lower than those applied to other behaviours where there was a shortfall. For example, where taxpayers have taken positions that are not reasonably arguable or participated in schemes.
Figure 2: Number of penalties imposed by penalty type in 2021–22
Figure 3: Net value of penalties (after remissions, reductions and cancellations) by penalty type in 2021–22
Tax and program types
We applied penalties to statements and positions for:
- income tax
- GST
- luxury car tax (LCT)
- PAYG withholding
- stimulus
- fuel tax credits (FTC)
- fringe benefits tax (FBT)
- superannuation.
Figure 4: Value of penalties imposed, remitted and reduced by tax and program type in 2021–22
Table 2: Overview of penalties by tax and program type in 2021–22
Penalty and program type
|
Number
|
Penalties imposed ($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
|
5,363
|
1,395.7
|
92.9
|
23.0
|
0.2
|
1,279.7
|
GST
|
6,677
|
119.7
|
9.0
|
0.6
|
-
|
110.1
|
Luxury car tax
|
45
|
2.2
|
-
|
-
|
-
|
2.2
|
PAYG withholding
|
141
|
1.6
|
0.0
|
0.0
|
-
|
1.5
|
Stimulus
|
109
|
2.9
|
1.6
|
-
|
-
|
1.4
|
Fuel tax credits
|
139
|
1.3
|
-
|
-
|
-
|
1.3
|
Fringe benefits tax
|
42
|
0.5
|
0.0
|
0.0
|
-
|
0.5
|
Multiple: activity statement
|
11
|
0.2
|
-
|
-
|
-
|
0.2
|
Superannuation
|
20
|
0.2
|
0.0
|
0.0
|
-
|
0.1
|
Due to rounding to the nearest $0.1 million, some totals may not correspond with the sum of the separate figures.
Note 3: The value of remissions and reductions of penalties levied in the current financial year will progressively increase in future financial years as cases proceed through the objection and dispute resolution processes.
Penalties for income tax and GST and make up most of the penalties. The average value of income tax penalties is much higher than GST penalties. This is due to a small number of large scheme penalties.
Penalties are applied on per period basis. Activity statements are typically for monthly or quarterly periods, whereas income tax applies to a financial year.
Client experience
The following graph and table show the breakdown of penalties imposed, remitted and reductions by client experience (ordered by net penalty amount).
Figure 5: Value of penalties imposed, remitted and reduced by client experience in 2021–22
Table 3: Overview of penalties by client experience in 2021–22
Client experience
|
Number
|
Penalties imposed ($m)
|
Penalties remitted at the time of imposition ($m)
|
Penalties remitted after the time of imposition ($m) (see note 4)
|
Subsequent net reduction in penalty type ($m) (see note 4)
|
Net penalty amount ($m)
|
Public and multinational businesses
|
554
|
788.0
|
76.4
|
0.4
|
-
|
711.3
|
Privately owned and wealthy groups
|
1,999
|
451.4
|
9.7
|
0.6
|
-
|
441.2
|
Small business
|
7,597
|
178.1
|
8.6
|
1.4
|
0.2
|
167.9
|
Individuals
|
2,273
|
45.0
|
2.9
|
2.5
|
0.0
|
39.6
|
APRA-regulated superannuation funds
|
9
|
57.5
|
5.4
|
18.8
|
-
|
33.4
|
Self-managed superannuation funds
|
52
|
3.9
|
0.5
|
-
|
-
|
3.4
|
Not-for-profits: charities
|
63
|
.4
|
-
|
-
|
-
|
0.4
|
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 the current financial year will progressively increase in future financial years as cases proceed through the objection and dispute resolution processes.
Measuring penalties
We use primary sources of information to measure penalties, like our total revenue effects measure.
Summary data for figures and tables is available on data.gov.auExternal Link.
Primary sources of information
We calculate the value of penalties imposed and remitted 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.
Find out more about circumstances in which we may apply penalties.
Information about the application and collection of penalties from our compliance work more broadly is provided in the annual report.
Overview of penalties for statements, schemes and positions not reasonably arguable for previous and current years.