Show download pdf controls
  • Significant global entities administrative penalties - frequently asked questions

    There have been increases to the administrative penalties for significant global entities (SGEs) from 1 July 2017.

    Find out about:

    How can SGEs avoid increased penalties?

    How have administrative penalties changed for SGEs?

    What forms are subject to the increased FTL penalties?

    If a form has a due date prior to 1 July will increased SGE penalties apply if the entity fails to lodge the form or lodges the form late after 1 July?

    Can an SGE request a lodgment deferral?

    How will the SGE know they are receiving an FTL penalty?

    If an agent lodges an approved form late will the SGE be subject to the FTL penalty?

    Can SGEs request remission of an FTL penalty?

    Will the ATO apply the increased SGE penalties on the reporting requirements under Common Reporting Standard (CRS) legislation taking effect on the 1 July 2017?

    If, under the CRS, an administrative error is made resulting in multiple failures to lodge, will the entity be subject to multiple FTL penalties?

    Will the ATO remind an SGE of their obligation to lodge?

    Will an SGE receive a warning prior to receiving a penalty?

    Will the SGE get a separate warning for every approved form?

    How long does a warning last before an entity will receive another warning?

    If an SGE has received a warning previously, but not as an SGE, will they receive another warning before a penalty for FTL is imposed at the SGE rate?

    How can SGEs avoid increased penalties?

    SGEs can avoid administrative penalties by lodging on time and without error.

    It is important that SGEs review their reporting obligations to ensure they avoid the imposition of administrative penalties.

    How have administrative penalties changed for SGEs?

    From 1 July 2017, administrative penalties will double for SGEs that:

    • make false or misleading statements on or after 1 July 2017
    • fail to have a reasonably arguable position on or after 1 July 2017, or
    • fail to provide a document where the document is necessary for the Commissioner to determine a tax-related liability accurately where the lodgment due date was on or after 1 July 2017.

    The doubled penalties apply to all statements made on or after 1 July regardless of due date.

    Failure to lodge (FTL) penalties will increase for lodgments of approved forms with a due date on or after 1 July 2017.

    The FTL penalty range for SGEs will change from $180 to $4,500 prior to 1 July 2017, to a range of $105,000 (for documents up to 28 days late) up to $525,000 (for more than 16 weeks late).

    What forms are subject to the increased FTL penalties?

    The increased FTL penalties will apply in respect of all approved forms required to be lodged by SGEs, if not lodged on time.

    Approved forms that are discretionary, such as voluntary disclosures or objection requests, cannot have FTL penalties applied.

    If a form has a due date prior to 1 July, will increased SGE penalties apply if the entity fails to lodge the form or lodges the form late after 1 July?

    No. The increased FTL penalties for SGEs only apply to forms with a due date on or after 1 July 2017. Penalties may still apply at the non SGE rate.

    See Failure to lodge on time penalty for more information about calculating FTL penalties.

    Can an SGE request a lodgment deferral?

    Yes, lodgment deferrals can be requested as per current practices.

    For more information refer to the lodgment program deferrals.

    If the entity lodges after the lodgment deferral date, and the deferred due date is after 1 July 2017, it will be considered a failure to lodge on time and SGE penalties may be applied.

    How will the SGE know they are receiving an FTL penalty?

    All taxpayers will receive a penalty notice when a FTL penalty is applied.

    The penalty notice will show a FTL penalty rate between $105,000 to $525,000 for SGEs. The maximum FTL penalty for other taxpayers is $5,250.

    If an agent lodges an approved form late will the SGE be subject to the FTL penalty?

    Yes, unless the Safe Harbour Provisions apply.

    SGEs are responsible for ensuring all forms are lodged on or before their due date. However, if a registered tax agent or BAS agent lodges the document, and the SGE provided them with all relevant tax information to enable them to lodge the return, notice, statement or other document by the due date, the SGE may not be liable to the penalty. This is referred to as safe harbour.

    The SGE carries the burden of proof to establish that they provided all relevant information as required to the tax agent. See safe harbour guidelines.

    Can SGEs request remission of a FTL penalty?

    Yes, SGEs have the same remission options as all taxpayers.

    See request remission for more information.

    Will the ATO apply the increased SGE penalties on the reporting requirements under Common Reporting Standard (CRS) legislation taking effect on the 1 July 2017?

    Yes. These Common Reporting Standard reports comprise of statements required to be lodged in an approved form.

    If, under the CRS, an administrative error is made resulting in multiple failures to lodge, will the entity be subject to multiple FTL penalties?

    PSLA 2011/19 outlines instances where we will consider remission of penalties, including when:

    • circumstances are beyond the control of the entity,
    • it is fair and reasonable to remit, or
    • not remitting would result in an unjust results.

    One example of an unjust result included in the PSLA is 'It would not be appropriate to apply multiple FTL penalties if the non-lodgment occurred as a result of an administrative oversight. However this would depend on the particular facts and circumstances of each case.'

    Will the ATO remind an SGE of their obligation to lodge?

    It is the responsibility of the SGE to be aware of their lodgment obligations.

    Whilst there are some circumstances where taxpayers are reminded to lodge, the ATO will not generally provide a reminder.

    Not having received a reminder will not be grounds for either non-imposition or remission of a penalty.

    Will an SGE receive a warning prior to receiving a penalty?

    A warning is not required under the law. SGEs should therefore lodge all documents on time, or seek an extension if this is not possible. However, we will generally issue a warning and/or reminder prior to imposing a late lodgment penalty, regardless of SGE status.

    If a SGE has received previous warnings, they should be extra vigilant to ensure all future lodgments are made on time.

    Will the SGE get a separate warning for every approved form?

    A warning is not required under law. However, in assessing any FTL we will take into account individual circumstances, including the compliance and overall lodgment history of the SGE. As such, previous warnings for different form types are taken into account in reaching a decision on whether to impose an FTL penalty.

    How long does a warning last before an entity will receive another warning?

    A warning is not required under law before we apply a penalty. However, as a matter of practice, if there has been a reasonable period of good compliance and lodgment, this would be taken into account even if the taxpayer had received a warning in the past.

    If an SGE has received a warning previously, but not as a SGE, will they receive another warning before a penalty for FTL is imposed at the SGE rate?

    A warning is not required under law. However, our general practice is to provide at least one warning of FTL before imposing a FTL penalty.

    There is no requirement for a SGE to get a FTL warning highlighting the SGE penalty rate before a SGE penalty is applied. Depending on the circumstances we may decide to issue an additional warning for SGEs.

    Last modified: 07 Jul 2017QC 52848