Tax laws authorise us to impose administrative penalties for a range of conduct, such as:
- claiming a deduction you are not entitled to
- making a false or misleading statement.
The purpose of the penalty provisions is to encourage taxpayers to take reasonable care to comply with their obligations.
The law specifies the conditions under which we can apply a penalty and the amount of the penalty. However, we have discretion to reduce (remit) the penalty according to individual circumstances. We frequently remit penalties before we issue notices of your tax debt.
If you disagree with a penalty imposed on you, in most cases you may ask us to remit it. However, for some penalties you must dispute them through the objection process.
You can ask for a reduction (partial remission) or cancellation (full remission) of any penalty, including penalties for failing to:
- lodge documents on time
- withhold amounts as required (PAYG withholding system)
- meet other tax obligations.
You can make your request:
- through our online services if you are a business or tax agent (you must be registered)
- by phone (for small penalties and simple cases)
- by mail to
Australian Taxation Office
PO Box 327
ALBURY NSW 2640
For large penalties or complicated cases, we recommend you write to us.
When requesting a review of a penalty, include:
- your full name
- your contact details
- your tax file number (TFN) or Australian business number (ABN)
- the reference number from the letter advising you of our decision
- the reasons you think it is fair and reasonable for us to remit the penalty in your situation
- details of penalty ($) amounts and the dates penalties were imposed (if known).
An objection must be lodged when disputing a penalty relating to:
- a tax shortfall
- false or misleading statements in a:
- tax return
- business activity statement
- fuel scheme claim form
- super statement including
- member contribution statement
- lost member statement and
- departing Australia superannuation payment report
- failing to provide a document requested by the Commissioner (such as a tax return).
One of our key principles is that taxpayers who under-report their income, over-claim their credits, or delay paying their tax should not gain an advantage over taxpayers who do the right thing.
In deciding whether to remit a penalty we also consider:
- your compliance history
- whether tax was deferred or avoided
- the reasons for the increased tax (or reduced credits) that brought about the imposition of penalties
- whether we became aware of the tax shortfall as a result of your voluntary disclosure or because of our compliance efforts
- your attitude towards complying with the tax laws.
We encourage taxpayers with a good compliance history to remain compliant by treating them more leniently than taxpayers who aren't compliant.
This means we consider your compliance history when deciding whether it is fair and reasonable to remit the penalty in full, or in part.
The weight we give to compliance history varies depending on the circumstances.
A good compliance history is generally one where you:
- have met all your lodgment obligations on time (including lodging activity statements and tax returns)
- have paid all non-disputed debt (or have a payment arrangement)
- haven't recently been liable for a penalty.
If a tax debt was paid late (deferred) rather than permanently avoided, there may be scope to remit the penalty. The level of remission (partial or full) would be influenced by the period of deferral and the amount of tax avoided as a result of the deferral.
A taxpayer may account for their GST on the wrong activity statement (that is, in the wrong period). After the amendments, if there is no shortfall amount in overall terms, the penalty may be remitted in full.
Similarly, if a deduction or credit is claimed in the wrong taxpayer's return or activity statement, but there is no overall shortfall amount, a penalty may be remitted in full.
However, if the two taxpayers have different tax rates there will be different shortfall amounts for each taxpayer and a net overall shortfall amount. Where this happens the penalty may be remitted so that it equals the penalty that would be applied to the net overall shortfall.End of example
If we don't remit the penalty amount in full, we'll give you a written explanation for our decision.
If you have objected to a penalty and are dissatisfied with our decision on your objection, you can seek an external review through the Administrative Appeals Tribunal or the Federal Court of Australia.
See alsoFind out how we apply penalties and how to request a remit (reduce or cancel) a penalty.