Tax laws impose interest charges from the date a tax liability was due to be paid until it and the accrued interest charges are paid. If a debt is increased by an amended assessment, interest charges also apply from the date the original assessment was due to be paid.
This is intended to:
- ensure that taxpayers who have underpaid their tax during this period do not receive an advantage over those who have paid their tax
- compensate the community for the impact of late payments.
As interest charges are compounding, they can quickly add up. The law provides us with the discretionary power to remit interest charges in certain circumstances.
Where a tax shortfall results from an audit or review and interest applies, we will give you a written statement about the reasons for the decision not to remit all or part of it. This statement will refer to the evidence on which our findings were based.
- Penalties and interest
- PS LA 2011/12 Administration of general interest charge (GIC) imposed for late payment or under estimation of liability
- PS LA 2006/8 Remission of shortfall interest charge and general interest charge for shortfall periods
You are not liable to a penalty if you make a false or misleading statement and you (and your tax adviser) took reasonable care. However, if reasonable care was not taken, the law imposes penalties based on your (or your tax adviser's) behaviour. The more culpable the behaviour leading to the statement, the higher the level of penalty. The facts and circumstances of a case ultimately determine the level of penalty, if any.
Even if you have taken reasonable care, you may be liable for a penalty if you do not have a reasonably arguable position about a contestable income tax or petroleum resource rent tax issue.
The amount of penalty that may apply in these and other circumstances may be reduced by making a voluntary disclosure. There are significant reductions if you:
- make a voluntary disclosure before you are notified of an ATO audit or risk review
- make an early disclosure (such as seeking a private binding ruling)
- make an acknowledged voluntary disclosure during the risk review stage of any compliance activity. In some circumstances a lesser reduction may be available for voluntary disclosures after notification of an audit.
Administrative statement penalties are doubled for Significant global entities.
If we have concluded that penalties should apply, we will tell you our reasons and give you an opportunity to present your views or provide further information that may affect the decision. Following this, if we still consider that penalties apply we will give you a written statement of the reasons for the decision to impose the penalty and not to remit all or part of it, including findings on material questions of fact. This will refer to the evidence on which our findings were based.
- Penalties and interest
- 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 2012/4 Administration of penalties for making false or misleading statements that do not result in shortfall amounts
- PS LA 2012/5 Administration of penalties for making false or misleading statements that result in shortfall amounts
- Significant global entities - penalties (https://www.ato.gov.au/business/public-business-and-international/significant-global-entities/significant-global-entities---penalties/)
Some administrative penalties and interest charges may apply under the Excise system.
Certain acts or omissions are offences against the Excise Act 1901 for which specific penalties are also prescribed.
- Excise guidelines for the alcohol industry, fuel industry, tobacco industry and duty free shops
The promoter penalty legislation is aimed at dealing with those who market unsustainable arrangements to the detriment of both taxpayers and ethical advisers. Penalties can apply directly to individuals as well as businesses.
The provisions are intended to apply in two circumstances:
- when an entity engages in conduct that results in them or another entity being a promoter of a tax exploitation scheme
- when an individual or entity implements a scheme promoted on the basis of conformity with a product ruling in a way that is materially different to that described in the product ruling.
- Good governance and promoter penalty laws
- PS LA 2008/7 Application of the promoter penalty laws (Division 290 of Schedule 1 to the Taxation Administration Act 1953) to promotion of tax exploitation schemes
- PS LA 2008/8 Application of the promoter penalty laws (Division 290 of Schedule 1 to the Taxation Administration Act 1953) to schemes involving product rulings
Tax and super laws specify a range of criminal offences that apply where taxpayers have not complied with their obligations. Sanctions may apply to both individuals and companies. As for any taxpayer, business taxpayers may be prosecuted for offences such as:
- making a false or misleading statement (including withholding information material to a tax matter)
- keeping incorrect or false records
- refusing or failing to provide a completed return or information, or to produce records or documents
- refusing or failing to attend before a tax officer or answer questions as and when required by a notice from us
- hindering or obstructing a tax officer who is exercising our access powers.
These offences are prosecuted before a court under the authority of the Commonwealth Director of Public Prosecutions (CDPP).
We also investigate, at times with the assistance of other law enforcement agencies, serious criminal breaches under the Criminal Code (such as fraud and money laundering). These matters are prosecuted by the CDPP.
The decision to prosecute for any Commonwealth criminal offence is made according to the Commonwealth prosecution guidelines, which are available from the Commonwealth Director of Public Prosecutions.External LinkInterest charges are imposed on outstanding amounts, such as shortfall amounts, late payments and unpaid tax debts. Interest charges apply whether or not a penalty applies. Penalties are applied where there is a failure to meet a tax obligation.