Penalty insights
This analysis covers behavioural penalties imposed in the 2022–23 and 2023–24 financial years, including those remitted and reduced, and a summary of the latest available data.
This analysis doesn't 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 didn't:
- 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.
Figure 1: Penalties imposed, remitted and reduced in 2022–23 and 2023–24
Measure | 2022-23 financial year | Client experience: Privately Owned and Wealthy Groups and Public and Multinational Business | All other client experiences (see note 1) | 2023-24 financial year | Client experience: Privately Owned and Wealthy Groups and Public and Multinational Business | All other client experiences (see note 1) |
|---|---|---|---|---|---|---|
Number of penalties imposed in year of imposition | 13,528 | 1,706 | 11,822 | 10,210 | 2,228 | 7,982 |
Penalties imposed ($m) in year of imposition | 1,391.8 | 967.9 | 423.8 | 1,408.7 | 828.0 | 580.7 |
Penalties remitted at the time the penalty was imposed ($m) in year of imposition | 85.4 | 69.2 | 16.2 | 50.5 | 38.7 | 11.8 |
Penalties remitted after the time the penalty was imposed ($m) (see note 2) in year of imposition | 6.0 | 1.9 | 4.1 | 90.1 | 87.9 | 2.2 |
Subsequent net reduction in penalty type ($m) (see note 2) in year of imposition | 0.2 | 0.2 | 0.0 | 0.0 | nil | 0.0 |
Net penalty outcome ($m) in year of imposition | 1,300.5 | 897.0 | 403.5 | 1,268.1 | 701.4 | 566.7 |
Average net penalty outcome ($) in year of imposition | 96,136.70 | 525,788.91 | 34,134.78 | 124,201.96 | 314,795.87 | 71,001.86 |
Net additions (detractions) in net penalty outcome ($m) in year after imposition | (9.9) | (4.6) | (5.3) | nil | nil | nil |
Net penalty outcome ($m) in year after imposition | 1,290.7 | 892.4 | 398.3 | nil | nil | nil |
Average net penalty outcome ($) in year after imposition | 95,406.14 | 523,092.18 | 33,687.96 | nil | nil | nil |
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 businesses, individuals, self-managed super funds, not-for-profits: charities, and APRA-regulated super funds. We update the client experience of the taxpayer based on the information we hold. Clients can move between client experiences.
Note 2: 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.
We often make remission decisions when penalties are imposed before we issue notices of your tax debt.
Table 1 shows that in the 2022–23 financial year, we imposed 13,528 penalties, totalling $1,391.8 million. However, we used our discretion to remit $85.4 million, or 6.1%, when they were imposed.
We remitted $6.0 million, or 0.4%, 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.
We made further changes to these penalties in the 2023–24 financial year, resulting in a net decrease of $9.9 million.
For the 2023–24 financial year, we imposed 10,210 penalties, totalling $1,408.7 million. However, we used our discretion to remit $50.5 million, or 3.6%, when they were imposed.
We remitted $90.1 million, or 6.4%, with no change in penalty type. We also made reductions of $0.0 million, or 0.0%, due to a change in penalty type after the penalty notice was issued.
Penalty types
The most common types of penalties we imposed in the 2023–24 financial year were for:
- recklessness
- intentional disregard of a taxation law
- failure to take reasonable care.
These behaviours produced a shortfall. The penalties for these behaviours made up 98% of the total penalties imposed.
Figure 2: Number of penalties imposed by penalty type in 2023–24
Figure 3: Net value of penalties (after remissions, reductions and cancellations) by penalty type in 2023–24
Tax and program types
We applied penalties to statements and positions for:
- income tax
- GST
- luxury car tax (LCT)
- PAYG withholding
- stimulus
- fuel tax credits (FTC)
- fringe benefits tax (FBT)
- multiple: activity statement
- superannuation.
Figure 4: Value of penalties imposed, remitted and reduced by tax and program type in 2023–24
Penalty and program type | Number | Penalties imposed ($m) | Penalties remitted at the time 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 | 4,489 | 1,089.9 | 40.0 | 88.8 | 0.0 | 961.0 |
GST | 5,337 | 315.0 | 10.3 | 1.3 | 0.0 | 303.4 |
PAYG withholding | 67 | 2.0 | 0.1 | 0.0 | nil | 1.9 |
Fuel tax credits | 248 | 1.1 | 0.0 | nil | nil | 1.1 |
Fringe benefits tax | 26 | 0.3 | nil | nil | nil | 0.3 |
Luxury car tax | 13 | 0.3 | nil | nil | nil | 0.3 |
Multiple: activity statement | 7 | 0.1 | 0.0 | nil | nil | 0.0 |
Stimulus | 18 | 0.0 | nil | nil | nil | 0.0 |
Superannuation | 5 | 0.0 | nil | nil | nil | 0.0 |
Due to rounding to the nearest $0.1 million, some totals may not correspond with the sum of the separate figures.
Note 3: The value of remissions and reductions of penalties levied in the 2023–24 financial year will progressively increase in future financial years as cases proceed through the objection and dispute resolution processes.
Penalties for income tax and GST and make up most of the penalties. The average value of income tax penalties is much higher than GST penalties. This is due to a small number of large scheme penalties.
Penalties are applied on a per period basis. Activity statements are typically for monthly or quarterly periods, whereas income tax applies to a financial year.
Client experience
The following graph and table show the breakdown of penalties imposed, remitted and reductions by client experience (ordered by net penalty amount).
Figure 5: Value of penalties imposed, remitted and reduced by client experience in 2023–24
Client experience | Number | Penalties imposed ($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) |
|---|---|---|---|---|---|---|
Privately owned and wealthy groups | 1,733 | 562.4 | 13.7 | 2.7 | nil | 546.0 |
Small business | 5,732 | 534.3 | 7.7 | 1.8 | 0.0 | 524.7 |
Public and multinational businesses | 495 | 265.6 | 25.0 | 85.2 | nil | 155.3 |
Individuals | 2,113 | 27.7 | 2.7 | 0.3 | nil | 24.7 |
Self-managed superannuation funds | 55 | 12.4 | 1.3 | nil | nil | 10.8 |
Not-for-profits: charities | 70 | 6.4 | 0.0 | nil | nil | 6.4 |
APRA-regulated superannuation funds | 12 | 0.2 | 0.0 | 0.1 | 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 4: The value of remissions and reductions of penalties levied in the 2023–24 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.