Interest and penalties – application to Crown entities

The machinery provisions for the collection and recovery of interest and penalties are contained in the Taxation Administration Act 1953 (TAA). The TAA has express legislative provisions excluding the Commonwealth or an authority of the Commonwealth from the application of interest charges. However, previously there was no equivalent provision in relation to states and territories, nor was there an express provision about the application of penalties to the Crown.

Section 2B was inserted into the TAA to clarify that the Act binds the Crown and that the Crown is not liable for certain pecuniary penalties or to be prosecuted for certain offences, effective as at 25 February 2015. This is explained in Treasury Legislation Amendment (Repeal Day) Act 2015External Link and the Explanatory MemorandumExternal Link to Treasury Legislation Amendment (Repeal Day) Bill 2014.

This means that the Crown, and entities with Crown immunities (Crown entities), are not liable to pay general interest charge, shortfall interest charge or a penalty under the uniform penalty regime, if liability for that penalty or interest charge would be imposed by the TAA (rather than another Act).

If you believe you should have Crown immunity and have had penalties and interest incorrectly imposed on your account since 25 February 2015, phone us on 13 11 42.