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  • Significant global entities – penalties

    The information on this page will help you understand the increased penalties, which will apply to all significant global entities (SGEs).

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    Administrative statement penalties

    Administrative statement penalties are doubled from 1 July 2017 (twice the amount that applies to all other taxpayers) for SGEs that:

    • do not take reasonable care
    • take a tax position that is not reasonably arguable
    • fail to provide documents when required and the Commissioner of Taxation determines the liability without the document.

    Penalties for SGEs that enter into tax avoidance and profit shifting schemes that result in scheme benefits received from 1 July 2015 are also doubled, if they do not have a reasonably arguable position.

    Failure to lodge on time (FTL) penalties for SGEs have also increased by up to 500 times.

    From 5 December 2019, the increased penalties for SGEs mentioned above also apply to SGE subsidiary members of income tax consolidated group or a multiple entry consolidated (MEC) groups.

    For more information see SGE penalties extended to subsidiary entities.

    The doubled penalty applies from:

    • 1 July 2017 for all other SGEs.
    • 5 December 2019 for an SGE subsidiary member of a tax consolidated or MEC group
    • 1 July 2020 for entities satisfying the updated SGE definition per Treasury Laws Amendment (2020 Measures No. 1) Act 2020
    SGE administrative penalties for shortfall amounts

    Culpable behaviour

    Base penalty percentage applicable to the shortfall amount

    Making a false or misleading statement

    50%, 100%, 150%

    Making a statement which treats a law as applying in a way that was not reasonably arguable

    50%

    Failing to provide a document as required

    150%

    SGE administrative penalties for no shortfall amounts

    Penalty units

    From 1 July 2020

    Intentional disregard

    120 penalty units ($26,640)

    Recklessness

    80 penalty units ($17,760)

    No reasonable care

    40 penalty units ($8,880)

    For more information see statements and positions that are not reasonably arguable.

    Scheme penalties

    Administrative penalties are doubled for an SGE that enters into tax avoidance and profit shifting schemes, unless they have a reasonably arguable position.

    Doubled scheme penalties applies from:

    • 1 July 2020 for entities satisfying the updated SGE definition per Treasury Laws Amendment (2020 Measures No. 1) Act 2020
    • 1 July 2015 for all other SGEs.

    Failure to lodge on time penalty

    The Failure to lodge on time (FTL) base penalty amount is multiplied by five hundred where the entity is an SGE. FTL penalties apply when an approved form (for example, a return, notice or other document) is not lodged by its due date. Examples of approved forms include:

    • Income Tax returns
    • Activity Statements and GST annual returns
    • Fringe Benefits Tax returns
    • Country by Country reporting statements
    • General Purpose Financial Statements
    • Single Touch Payroll reports
    • PAYG Payment Summary Annual Reports

    Increased FTL penalties apply when an SGE:

    • fails to lodge an approved form on time where it was required to be lodged from 1 July 2017
    • subsidiary member that fails to lodge an approved form on time where it was required to be lodged from 5 December 2019.

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

    SGE FTL penalty amount for forms due from 1 July 2020

    Days late

    SGE penalties

    28 or less

    $111,000

    29 to 56

    $222,000

    57 to 84

    $333,000

    85 to 112

    $444,000

    More than 112

    $555,000

    See also

    Requesting remission

    Before applying FTL penalties

    While we generally do not provide a reminder to lodge, we will issue a warning or reminder prior to imposing a late lodgment penalty. However, this is not required under law – not having received a warning or reminder will not be grounds for either non-imposition or remission of an FTL penalty.

    If an SGE has received previous warnings about lodging on time or FTL penalties, they should be extra vigilant to ensure all future lodgments are made on time.

    Avoid increased penalties

    To avoid penalties, SGEs are responsible for understanding their reporting obligations and lodging their approved forms on time without error.

    An SGE that takes reasonable care with their tax obligations will not incur a false or misleading statement penalty.

    An SGE will have the opportunity to seek a remission of the penalty if imposed.

    Lodgment deferrals

    If an SGE is unable to meet lodgment deadlines due to exceptional and unforeseen circumstances, they can request a deferral.

    Lodgment deferrals should be requested as soon as practicable once it is believed that a lodgment due date is unlikely to be met. If the entity lodges after the deferred due date it will be considered a failure to lodge on time and SGE penalties may be applied.

    Safe harbour

    While all entities are responsible for ensuring they are accurate and up to date with their reporting obligations, the safe harbour provisions remove an entity's liability to an FTL penalty or a false or misleading statement penalty when actions by their registered tax agent or BAS agent meet the following criteria:

    • their registered tax agent or BAS agent lodges the document late, or makes a false or misleading statement for reasons not due to the agent's intentional disregard or recklessness as to the operation of a tax law, and
    • the entity can show they had provided their agent with all relevant information to enable them to lodge the document by the due date or make the correct statement.

    The entity carries the burden of proof to establish that they provided all relevant information as required to their registered agent.

    For more information see Safe harbour guidelines.

    Transitional penalty provisions for entities that meet the expanded SGE definition

    In respect of entities that meet the expanded SGE definition normal administrative penalties may apply instead of the significantly increased penalties for SGEs. This only applies to entities that meet the expanded SGE definition whereby the income year starts from 1 July 2019 and before 1 July 2020.

    Find out about:

    Automatic Exchange of Information

    We will apply the increased SGE penalties to Automatic Exchange of Information (AEOI) reporting requirements, including Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA). Both of these reports comprise of statements required to be lodged in an approved form.

    COVID Concession

    We encourage you to lodge on time or when this is not possible we recommend that you contact our Large business phone service (1300 728 060) which provides access to officers who can talk to you about your debt and lodgment obligations.

    If you lodged late due to the effects of COVID-19, we may remit the failure to lodge on time penalties that apply to SGEs in specified circumstances (applicable during specified dates).

    We will continue to monitor the effects of COVID-19 and will update our guidance as further developments occur.

    Ceased concession: 2021 Income tax return and GPFS

    If lodgment of your 2021 income tax return or corresponding GPFS is less than 30 days late, we will remit the failure to lodge on time SGE penalty to nil if all the following apply:

    • Your SGE has a substituted accounting period of 31 December 2020 (with a lodgment due date of 15 July 2021, or 31 July 2021 where lodged electronically by a tax agent).
    • The failure to lodge on time SGE penalty was incurred in relation to the 2021 income tax return and, or corresponding GPFS.
    • Where lodgment of the 2021 income tax return and, or corresponding GPFS is less than 30 days late.

    Despite the penalty remission, you still needed to make your payments on time.

    Ceased concession during 2020

    If lodgment of an approved form including the general purpose financial statement (GPFS), was less than 30 days late, we would have remitted the failure to lodge on time SGE penalty to nil for the period until 14 August 2020, if both the following applied:

    • You were unable to lodge the approved form (including the GPFS) due to circumstances beyond your control as a direct result of COVID-19.
    • The failure to lodge on time SGE penalty was incurred after 23 January 2020 and on or before 14 August 2020.

    Despite the penalty remission, you still needed to make your payments on time.

    Practice statements

    The following practice statements provide guidance on the ATO's administrative practice for the imposition and remission of penalties to which the increases for SGEs apply:

    • MT 2008/1 Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard
    • MT 2008/2 Shortfall penalties: administrative penalty for taking a position that is not reasonably arguable
    • PS LA 2011/19 Administration of penalties for failing to lodge documents on time
    • PS LA 2012/5 Administration of penalties for making false or misleading statements that result in shortfall amounts
    • PS LA 2012/4 Administration of penalties for making false or misleading statements that do not result in shortfall amounts
    • PS LA 2014/2 Administration of transfer pricing penalties for income years commencing on or after 29 June 2013
    • PS LA 2014/4 Administration of the penalty imposed under subsection 284-75(3) of Schedule 1 to the Taxation Administration Act 1953.

    More information

    If you have any questions related to SGE Penalties, email us at: SGE@ato.gov.au.

    For information on Law changes that impact the application of SGE penalties, see:

    Last modified: 09 Dec 2021QC 53380