Senate

Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017

Diverted Profits Tax Bill 2017

Diverted Profits Tax Act 2017

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)
This explanatory memorandum takes account of amendments made by the House of Representatives to the Bill as introduced.

Chapter 2 - Increasing penalties for significant global entities

Outline of chapter

2.1 Schedule 2 to this Bill increases the administrative penalties that can be applied by the Commissioner to significant global entities to encourage them to better comply with their taxation obligations, including lodging tax documents on time and taking reasonable care when making statements.

2.2 In addition, the Schedule includes a minor amendment to ensure administrative penalties apply as intended if a significant global entity does not lodge a general purpose financial statement as required under the taxation law. This will encourage timely lodgment of such statements.

2.3 All legislative references in this Chapter are to Schedule 1 to the TAA 1953 unless otherwise stated.

Context of amendments

Background

Significant global entities

2.4 The Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 (2015 Act) introduced a package of measures designed to address tax avoidance and profit shifting schemes entered into by large multinationals. Specifically, the measures applied to entities including those that are part of a multinational group, earning significant amounts of income worldwide - AUD$1 billion or more annually. To define these types of entities, Schedule 1 to the 2015 Act introduced the concept of a 'significant global entity' (refer section 960-555 of the ITAA 1997).

2.5 Schedule 3 to the 2015 Act introduced amendments to double the amount of penalties applying to significant global entities entering into tax avoidance and profit shifting schemes (see subsection 284-155(3)). The increased penalties were designed to help deter tax avoidance.

2.6 The penalty amounts applying to significant global entities for other administrative penalties were not similarly increased in the 2015 Act. These existing penalties may not be an effective deterrent for non-compliance by these types of large entities given the significant financial resources that large entities have at their disposal.

2.7 Schedule 4 to the 2015 Act also implemented new standards for transfer pricing documentation and Country-by-Country (CbC) reporting for significant global entities to assist the Commissioner to assess transfer pricing risks. The first set of reports under these reforms is due by the end of 2017.

Operation of existing law

Failure to lodge on time penalties

2.8 The 'failure to lodge on time' (FTL) penalty is an administrative penalty that is applied to entities that do not lodge a return, notice, statement or other approved form with the Commissioner by the required day (refer subsection 286-75(1)). The penalty is intended to encourage the timely lodgment of taxation documents.

2.9 The amount of the penalty is worked out under section 286-80, which provides for a base amount of one penalty unit (currently $180 under section 4AA of the Crimes Act 1914 [1] ) for each period of 28 days that the lodgment of the document is overdue up to a maximum of 5 periods, limiting the maximum penalty to $900.

2.10 The base penalty is multiplied by two if the entity meets certain threshold criteria outlined in subsection 286-80(3) ('medium entity') or multiplied by five if the entity meets the threshold criteria outlined in subsection 286-80(4) ('large entity'). The criteria in subsections 286-80(3) and (4) require assessment of the entity's assessable income, goods and services tax (GST) turnover or status as a medium or large withholder for a particular period.

2.11 For example, paragraph 286-80(4)(b) provides that the base penalty amount is multiplied by five if the entity's assessable income is $20 million or more. This results in a maximum penalty of $4,500. This penalty amount applies equally to entities with $20 million (or more) of assessable income as well as to those entities with $1 billion (or more) of assessable income.

2.12 The penalty amounts applicable under the current law are as follows:

Table 2.1: FTL penalty amounts*
Days late 28 or less 29 to 56 57 to 84 85 to 112 More than 112
General case
(Multiplier 1)
$180 $360 $540 $720 $900
Medium entity meeting threshold criteria in subsection 286-80(3)
(Multiplier 2)
$360 $720 $1,080 $1,440 $1,800
Large entity meeting threshold criteria in subsection 286-80(4)
(Multiplier 5)
$900 $1,800 $2,700 $3,600 $4,500
*Penalty amounts are calculated based on the current value of a Commonwealth penalty unit of $180. In the 2016-17 Mid-Year Economic and Fiscal Outlook, the Government announced an increase in the value of a Commonwealth penalty unit to $210, with effect from 1 July 2017.

Penalties relating to statements and failing to give documents necessary to determine tax related liabilities

2.13 The administrative penalties in section 284-75 include penalties for:

·
making a false or misleading statement (refer subsections 284-75(1) and (4));
·
making a statement which treats a law as applying in a way that was not reasonably arguable (refer subsection 284-75(2)); and
·
failing to give the Commissioner a document on time, where the document is necessary for the Commissioner to determine a tax-related liability accurately (refer subsection 284-75(3)).

2.14 The amount of the penalty is worked out under section 284-85. This section provides that the penalty is equal to the base penalty amount (refer the paragraph below), which may be increased under section 284-220 (for additional culpability factors) or reduced under section 284-225 (for voluntary disclosure).

2.15 The base penalty amount is worked out using the table in subsection 284-90(1) but may also be reduced if section 284-224 is applicable (where the law was applied in an accepted way). The applicable table item in subsection 284-90(1) depends on whether there is a shortfall amount (refer to section 284-80 for circumstances when there is a shortfall amount) and culpable behaviour (for example, intentional disregard or recklessness). Where two or more items in the table in subsection 284-90(1) apply, the item that produces the greater base penalty amount applies to the exclusion of the other items (refer subsection 284-90(2)).

2.16 The base penalty amounts applicable under the current law are calculated as follows:

Table 2.2: Base penalty amount
Culpable behaviour Base penalty amount
Statement results in shortfall amount - base penalty amount calculated as % of shortfall
Intentional disregard 75%
Recklessness 50%
No reasonable care 25%
No reasonably arguable position 25%
Statement does not result in shortfall amount - base penalty amount in penalty units and dollars
Intentional disregard 60 penalty units currently $10,800*
Recklessness 40 penalty units currently $7,200*
No reasonable care 20 penalty units currently $3,600*
Document necessary to determine a tax-related liability - base penalty amount calculated as % of tax-related liability concerned
Failure to lodge document on time, where document necessary for Commissioner to determine a tax-related liability accurately 75%

*Penalty amounts are calculated based on the current value of a Commonwealth penalty unit of $180. In the 2016-17 Mid-Year Economic and Fiscal Outlook, the Government announced an increase in the value of a Commonwealth penalty unit to $210, with effect from 1 July 2017.

General purpose financial statements

2.17 Subsection 3CA(2) of the TAA 1953 requires certain entities (that must be significant global entities) to give the Commissioner a general purpose financial statement (where one has not already been provided to the Australian Securities and Investments Commission (ASIC)). It was intended that penalties would apply for late or non-lodgment, however the reporting obligation, contained in section 3CA of the TAA 1953, did not require that these financial statements must be given in the approved form, with the unintended result that the FTL penalty provisions in section 286-75 would not apply. This is because, subsection 286-75(1) which imposes the penalty, only applies where the document has to be given to the Commissioner in the approved form.

Summary of new law

2.18 Schedule 2 to this Bill amends Schedule 1 to the TAA 1953 to increase the administrative penalties imposed on significant global entities to encourage them to better comply with their taxation obligations, including lodging tax documents on time and taking reasonable care when making statements.

2.19 Schedule 2 also includes a minor technical amendment to the TAA 1953 to ensure administrative penalties apply where a significant global entity does not lodge a general purpose financial statement as required under the taxation law to encourage timely lodgment.

Comparison of key features of new law and current law

New law Current law
Failure to lodge penalties - application to significant global entities
The amount of administrative penalty that applies for significant global entities that do not lodge a return, notice, statement or other approved form with the Commissioner on time is increased.

The base penalty amount is multiplied by 500 if an entity is a significant global entity at the relevant time. This results in a maximum penalty of $450,000, which applies where the lodgment is more than 16 weeks late.

Administrative penalties are imposed on taxpayers that do not lodge a return, notice, statement or other approved form with the Commissioner on time.

The base penalty amount is multiplied by five if an entity is a large withholder, or has assessable income of $20 million or more, or has GST turnover of $20 million or more. This results in a maximum penalty of $4,500, which applies where the lodgment is more than 16 weeks late.

Penalties relating to statements and failing to give documents necessary to determine tax-related liabilities - application to significant global entities
The administrative penalty amount is doubled if the entity is a significant global entity at the relevant time. There are a range of administrative penalties that may be imposed on taxpayers in relation to statements and failing to give documents necessary to determine tax-related liabilities on time.

The amount of the penalty depends on various factors, including any culpable behaviour involved (for example, intentional disregard, recklessness etc) and the quantum of any resulting shortfall amount.

General purpose financial statements
Significant global entities that have not already provided a general purpose financial statement to ASIC must give a general purpose financial statement to the Commissioner. The statement must be in the approved form.

An entity that fails to provide such a statement to the Commissioner by the due date or in the manner specified by the Commissioner is liable for an administrative penalty.

Significant global entities that have not already provided a general purpose financial statement to ASIC must give a general purpose financial statement to the Commissioner.

Detailed explanation of new law

Increase in failure to lodge penalties

2.20 These amendments increase the amount of the administrative penalty imposed on significant global entities that do not lodge a return, notice, statement or other approved form with the Commissioner on time. The increased penalties apply to all lodgments required in the approved form which includes income tax returns, activity statements, CbC reports and general purpose financial statements (refer paragraphs 2.42 to 2.43 below).

2.21 Where an entity is liable for a FTL penalty under subsection 286-75(1), the base penalty amount is multiplied by 500 if the entity is a significant global entity (within the meaning of the ITAA 1997) at the relevant time. For administrative ease, these amendments provide a test period for determining significant global entity status which is designed to allow the Commissioner to rely on the most recent information available at the time the relevant approved form is due to be provided to the Commissioner. Prima facie, if an entity is a significant global entity during the test period, the higher penalties will apply. However, these amendments include a carve-out rule for entities that cease to be significant global entities for the income year during which the relevant approved form is due to the Commissioner, to ensure that such entities are not unfairly subject to higher penalties.

[Items 5 and 6, paragraph 286-80(1)(b) and subsections 286-80(4A) and (4B)]

2.22 Generally, a significant global entity for a period is an entity with annual global income of AUD$1 billion or more, or an entity which is part of a group with annual global income of AUD$1 billion or more. An entity may also be a significant global entity if the entity is a member of a group and one of the members of the group is a global parent entity (in relation to which the Commissioner has made a determination under subsection 960-555(3) of ITAA 1997) (refer subsection 960-555(2) of ITAA 1997). The Commissioner may make a determination under subsection 960-555(3) of ITAA 1997 in relation to a global parent entity if the Commissioner reasonably believes that, if global financial statements had been prepared for the global parent entity, the entity's annual global income for the period would have been $1 billion or more.

2.23 An entity's status as a significant global entity for the purposes of these amendments is determined on the basis of the most recent income year or period, for which, either:

·
the Commissioner has made an income tax assessment for the entity; or
·
the Commissioner has made a determination under subsection 960-555(3) of ITAA 1997 in relation to the entity or the global parent entity for the group of which the entity is a member (refer paragraph above); or
·
the entity has given a statement to the Commissioner in accordance with Subdivision 815-E of the ITAA 1997 (the CbC reporting regime). [Item 6, paragraphs 286-80(4A)(b) and (c)]

2.24 The most recent income year or period is worked out by reference to the day on which the relevant approved form is due to be provided to the Commissioner. The most recent income year or period is the one with the most recent last day. If more than one income year or period ends on that day, the higher penalties apply for an entity that is a significant global entity for any of those income years or periods. [Item 6, paragraphs 286-80(4A)(b) and (c)]

2.25 For the 2016-17 income year and later income years, an entity will be required to indicate whether it is a significant global entity on its income tax return. The Commissioner makes an assessment following lodgment of the entity's income tax return or if the entity has not lodged a tax return, the Commissioner may have issued a default assessment under section 167 of the Income Tax Assessment Act 1936.

2.26 An entity's lodgment of a CbC report will amount to self-identification as a significant global entity in an earlier year. Under the CbC reporting regime, an entity is required to lodge statements to the Commissioner relating to an income year or period if, during a period in the immediately preceding income year, it was a significant global entity (refer subsection 815-355(1) of ITAA 1997).

Entity ceasing to be a significant global entity

2.27 However, the higher penalty amount relating to significant global entity status is taken never to have applied to an entity if the entity is not a significant global entity for the income year during which the relevant approved form is due to the Commissioner. An entity will indicate whether it is a significant global entity on its income tax return for that year. The effect of this rule is to change the amount of the penalty with effect from the day the penalty was first imposed. The imposition of the penalty is valid but the penalty amount is reduced from the day the penalty was imposed. [Item 6, subsection 286-80(4B)]

2.28 This rule ensures that the higher penalties do not apply to an entity that is a significant global entity according to the most recent information available to the Commissioner (refer paragraphs 2.23 to 2.26 above) but no longer holds this status at the time of the conduct giving rise to liability for the penalty. In most cases, an entity that is a significant global entity for a recent income year or period will continue to be a significant global entity in subsequent years. Where this is not the case, this rule ensures that such entities are not unfairly subject to higher penalties.

Remission of penalty where an entity ceases to be a significant global entity

2.29 The Commissioner could remit the higher penalty amount relating to significant global entity status where the entity's income tax assessment is not yet available but the Commissioner is satisfied that an entity would not be a significant global entity for the income year during which the conduct giving rise to liability for the penalty occurred. This is because the general power of remission conferred on the Commissioner by section 298-20 is very wide, and a primary consideration for the Commissioner in exercising this power is achieving a just outcome.

2.30 The following examples demonstrate the operation of these rules and how it would be open to the Commissioner to remit a penalty where an entity is no longer (or is expected to no longer be) a significant global entity at the time of the conduct giving rise to liability for the penalty.

Example 2.1 Commissioner remits penalty Green Ltd fails to lodge its 2016-17 income tax return by the due date of 15 January 2018, instead lodging the return 21 days late on 5 February 2018.The Commissioner has not made a determination under subsection 960-555(3) of the ITAA 1997 in relation to Green Ltd's global parent entity nor has Green Ltd lodged a CbC report. On 15 January 2018, the most recent income year for which the Commissioner has made an assessment of Green Ltd's income tax is the 2015-16 income year. Green Ltd was part of a global group in the 2015-16 income year, which had annual global income over $1 billion. Therefore Green Ltd was a significant global entity for the 2015-16 income year. The Australian Taxation Office (ATO) contacts Green Ltd to notify the entity of its liability for a FTL penalty of $90,000 (the amount applicable for significant global entities lodging up to 28 days late).Green Ltd advises the ATO that it no longer belongs to a global group and explains that its annual global income is likely to fall in a range of $100-$200 million and certainly will be under the significant global entity threshold amount of $1 billion for the 2017-18 income year. The Commissioner is satisfied the entity will not be a significant global entity for the 2017-18 income year and remits the penalty to $900, the amount applicable to large entities.

Example 2.2 Commissioner does not remit penalty SaraW Ltd is due to lodge a document on 1 April 2018 but instead lodges it 35 days late. The Commissioner has not made a determination under subsection 960-555(3) of ITAA 1997 in relation to SaraW Ltd's global parent entity, Mas GmbH. SaraW Ltd has also not lodged a CbC report. SaraW Ltd was a significant global entity for the 2016-17 income year, for which the Commissioner has made an assessment of SaraW Ltd's income tax following the entity's lodgment of its income tax return. The ATO contacts SaraW Ltd to notify it of its liability for a FTL penalty of $180,000 (the amount applicable for significant global entities lodging 29 to 56 days late).SaraW Ltd advises the ATO that Mas GmbH's annual global income is expected to fall below $1 billion for the 2017-18 income year due to an economic downturn, such that it would not be a significant global entity for the income year. However, SaraW Ltd is unable to satisfy the ATO that Mas GmbH's income will fall below $1 billion. The ATO issues a penalty notice imposing a FTL penalty of $180,000 (the amount applicable for significant global entities lodging 29 to 56 days late).When SaraW Ltd lodges its income tax return for the 2017-18 income year, Mas GmbH's annual global income is below $1 billion. The penalty is recalculated to $1,800 (the amount applicable for large entities) from the date the penalty was imposed. This means that the penalty amount is the same as if the recalculated penalty amount had been imposed in the first instance.

2.31 Other than in the situations described in the above examples, the Commissioner will apply the same approach for remission of FTL penalties for significant global entities as it does for other taxpayers. Law Administration Practice Statement PS LA 2011/19 (Administration of the penalty for failure to lodge) provides guidance on the Commissioner's administration of the FTL penalties and on how the discretion to remit the FTL penalty is exercised.

2.32 Remission of FTL penalties is generally considered appropriate in circumstances beyond the control of the entity, where it is fair and reasonable or where imposing the FTL penalty would not provide a just result. The increased amount of FTL penalties applying to significant global entities is not by itself a relevant factor in considering if a penalty should be remitted.

Level of penalties and interaction with other penalties for other entities

2.33 The amendments ensure that a multiplier of 500 applies to the exclusion of any multipliers that may also apply to an entity that is both a significant global entity at the relevant time and an entity meeting criteria in subsections 286-80(3) or (4) as a medium or large entity (see paragraphs 2.10 to 2.11 above). In other words, the increased FTL penalties apply uniformly to all entities that are significant global entities, regardless of their size. [Item 6, subsection 286-80(4A)]

2.34 The FTL penalty for a significant global entity is $90,000 (which would apply where a document is lodged up to 4 weeks late). The maximum penalty, where a document is late by more than 16 weeks, is $450,000. For large entities, this means that FTL penalties increase by a factor of 100, compared to the original maximum penalty of $4,500.

2.35 The following table sets out the FTL penalties that apply to various entities under these amendments (the penalty amounts in the first three rows in the table for general application and medium and large entities are the same as those that apply under the law prior to these amendments):

Table 2.3 : FTL penalties*
Days late 28 or less 29 to 56 57 to 84 85 to 112 More than 112
General case
(provided entity is not a significant global entity at the relevant time)
(Multiplier 1)
$180 $360 $540 $720 $900
Medium entity meeting threshold criteria in subsection 286-80(3) (provided entity is not a significant global entity at the relevant time)
(Multiplier 2)
$360 $720 $1,080 $1,440 $1,800
Large entity meeting threshold criteria in subsection 286-80(4) (provided entity is not a significant global entity at the relevant time)
(Multiplier 5)
$900 $1,800 $2,700 $3,600 $4,500
Significant global entity
(Multiplier 500)
$90,000 $180,000 $270,000 $360,000 $450,000

*Penalty amounts are calculated based on the current value of a Commonwealth penalty unit of $180. In the 2016-17 Mid-Year Economic and Fiscal Outlook, the Government announced an increase in the value of a Commonwealth penalty unit to $210, with effect from 1 July 2017.

Increasing penalties relating to statements and failing to give documents necessary to determine tax-related liabilities

2.36 These amendments double the base penalty amount of certain penalties applying to an entity, if the entity is a significant global entity (within the meaning of the ITAA 1997) at the relevant time. This is achieved by doubling the base penalty amount for penalties imposed under section 284-75 (penalties relating to statements and failing to give documents necessary to determine tax-related liabilities to the Commissioner on time). [Items 2 and 3, subsections 284-90(1) and (1A)]

2.37 An entity's status as a significant global entity for the purposes of these provisions is determined on the basis of the most recent income year or period, for which, either the Commissioner has made an income tax assessment for the entity or a determination under subsection 960-555(3) of ITAA 1997 in relation to the entity's global parent entity or for which the entity has given a statement to the Commissioner in accordance with Subdivision 815-E of ITAA 1997 (see paragraphs 2.23 to 2.26 above). The most recent income year or period is the one with the most recent last day. If more than one income year or period ends on that day, the higher penalties apply for an entity that is a significant global entity for any of those income years or periods. The most recent income year or period is worked out by reference to the day on which the conduct giving rise to liability for such a penalty occurred. For penalties imposed under subsections 284-75(1), (2) and (4), the relevant conduct is the making of a statement and the base penalty amount is calculated under table items 1 to 6 of subsection 284-90(1). For penalties imposed under subsection 284-75(3), the relevant conduct is the failure to give the Commissioner a document by the due date and the base penalty amount is calculated under table item 7 of subsection 284-90(1). [Items 3 and 4, subsections 284-90(1A) and (4)]

Entity ceasing to be a significant global entity

2.38 However, the higher penalty amount relating to significant global entity status is taken never to have applied to an entity if the entity is not a significant global entity for the income year during which the conduct giving rise to liability for such a penalty occurred (see also paragraph 2.27 to 2.28). An entity will indicate whether it is a significant global entity on its income tax return for that year. The effect of this rule is to change the amount of the penalty with effect from the day the penalty was first imposed. The imposition of the penalty is valid but the penalty amount is reduced from the day the penalty was imposed. [Item 3, subsection 284-90(1B)]

2.39 This rule ensures that the higher penalties do not apply to an entity that is a significant global entity according to the most recent information available to the Commissioner (refer paragraphs 2.23 to 2.26 above) but no longer holds this status at the time of the conduct giving rise to liability for the penalty.

2.40 Where the entity's income tax assessment is not yet available but the Commissioner is satisfied that an entity would not be, a significant global entity for the income year during which the conduct giving rise to liability for the penalty occurred, the Commissioner could remit the higher penalty amount relating to significant global entity status. This is because the general power of remission conferred on the Commissioner by section 298-20 is very wide, and a primary consideration for the Commissioner in exercising this power is achieving a just outcome.

Level of penalties

2.41 The following table sets out the new penalty amounts imposed under section 284-75 that apply to significant global entities:

Table 2.4 : Base penalty amount applying for significant global entities
Culpable behaviour Base penalty amount
Statement results in shortfall amount - base penalty amount calculated as % of shortfall
Intentional disregard 150%
Recklessness 100%
No reasonable care 50%
No reasonably arguable position 50%
Statement does not result in shortfall amount - base penalty amount in penalty units and dollars
Intentional disregard 120 penalty units currently $21,600*
Recklessness 80 penalty units currently $14,400*
No reasonable care 40 penalty units currently $7,200*
Document necessary to determine a tax-related liability - base penalty amount calculated as % of tax-related liability concerned
Failure to lodge document on time, where document necessary for Commissioner to determine a tax-related liability accurately 150%

*Penalty amounts are calculated based on the current value of a Commonwealth penalty unit of $180. In the 2016-17 Mid-Year Economic and Fiscal Outlook, the Government announced an increase in the value of a Commonwealth penalty unit to $210, with effect from 1 July 2017.

General purpose financial statements must be in the approved form

2.42 To encourage timely lodgment of general purpose financial statements, the amendments enable the Commissioner to impose FTL penalties where an entity, that has not already provided a statement to ASIC, lodges a statement late or fails to lodge a statement with the Commissioner. This is achieved by requiring such statements to be provided to the Commissioner in the approved form. This aligns the operation of the lodgment obligation with the intent of the original amendments inserting the obligation. [Item 1, subsection 3CA(2) of the TAA 1953]

2.43 As entities that are required to lodge general purpose financial statements with the Commissioner are significant global entities, the higher FTL penalty amounts introduced by Schedule 2 apply (ranging from $90,000 to $450,000 depending on the number of days the lodgment is late - refer to the last row of table 2.3 above).

Consequential amendments

2.44 These amendments include notes to assist users of the legislation. [Items 3 and 6, notes to subsections 284-90(1A) and 286-80(4A)]

Application and transitional provisions

2.45 The amendments which increase FTL penalties for significant global entities apply to an entity's failure to give a return, notice, statement, information, notification or other document to the Commissioner on time if the day the relevant document is required to be given is on or after the later of 1 July 2017 and the day this Act commences. This Act commences on the first 1 January, 1 April, 1 July or 1 October to occur after the day the Act receives Royal Assent. [Clause 2 and subitems 7(3) and (4)]

2.46 The amendments which increase penalties relating to statements (imposed under subsections 284-75(1), (2) and (4)) apply in relation to statements made on or after the later of 1 July 2017 and the day this Act commences. [Paragraph 7(2)(a) and subitem 7(4)]

2.47 The amendments which increase penalties for failure to give the Commissioner a return, notice or other document by the due date, if the document is necessary to determine a tax-related liability (imposed under subsection 284-75(3)) apply to documents required to be given on or after the later of 1 July 2017 and the day this Act commences. [Paragraph 7(2)(b) and subitem 7(4)]

2.48 The amendments which require an entity to give the Commissioner a general purpose financial statement in the approved form apply on or after the later of 1 July 2017 and the day this Act commences. [Subitems 7(1) and (4)]

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Increasing Penalties For Significant Global Entities

2.49 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

2.50 The amendments in Schedule 2 increase the administrative penalties that can be applied by the Commissioner to significant global entities to encourage them to better comply with their taxation obligations, including lodging tax documents on time and taking reasonable care when making statements.

Human rights implications

2.51 This Schedule does not engage any of the applicable rights or freedoms as it applies to multinational entities not individuals.

Conclusion

2.52 This Schedule is compatible with human rights as it does not raise any human rights issues.


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