Taxation Administration Act 1953
Note: See section 3AA .Chapter 4 - Generic assessment, collection and recovery rules
An entity must not engage in conduct that results in that or another entity being a *promoter of a *tax exploitation scheme. Implementing scheme otherwise than in accordance with ruling 290-50(2)
An entity must not engage in conduct that results in a *scheme that has been promoted on the basis of conformity with a *product ruling being implemented in a way that is materially different from that described in the product ruling.
A scheme will not have been implemented in a way that is materially different from that described in a product ruling if the tax outcome for participants in the scheme is the same as that described in the ruling.290-50(2A)
For the purposes of subsection (2), disregard:
(a) subsection 82KZMGA(1A) of the Income Tax Assessment Act 1936 ; and
(b) subsection 394-10(5A) of the Income Tax Assessment Act 1997 .
Those 2 subsections relate to forestry managed investment schemes.
The effect of this subsection is that a scheme will have been implemented in a way that is materially different from that described in a product ruling if the tax outcome for participants in the scheme is the same as that described in the ruling only because of the operation of the subsections mentioned in paragraphs (a) and (b).
If the Federal Court of Australia is satisfied, on application by the Commissioner, that an entity has contravened subsection (1) or (2), the Court may order the entity to pay a civil penalty to the Commonwealth. Amount of penalty 290-50(4)
The maximum amount of the penalty is the greater of:
(a) 5,000 penalty units (for an individual) or 25,000 penalty units (for a body corporate); and
(b) twice the consideration received or receivable (directly or indirectly) by the entity and *associates of the entity in respect of the *scheme.
See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.Principles relating to penalties 290-50(5)
In deciding what penalty is appropriate for a contravention of subsection (1) or (2) by an entity, the Federal Court of Australia may have regard to all matters it considers relevant, including:
(a) the amount of the consideration received or receivable (directly or indirectly) by the entity and *associates of the entity in respect of the *scheme; and
(b) the deterrent effect that any penalty may have; and
(c) the amount of loss or damage incurred by scheme participants; and
(d) the nature and extent of the contravention; and
(e) the circumstances in which the contravention took place, including the deliberateness of the entity ' s conduct and whether there was an honest and reasonable mistake of law; and
(f) the period over which the conduct extended; and
(g) whether the entity took any steps to avoid the contravention; and
(h) whether the entity has previously been found by the Court to have engaged in the same or similar conduct; and
(i) the degree of the entity ' s cooperation with the Commissioner. Recovery of penalty 290-50(6)
The penalty is a civil debt payable to the Commonwealth, and the Commissioner may, on behalf of the Commonwealth, enforce an order for an entity to pay the penalty as if it were an order made in civil proceedings against the entity to recover a debt due by the entity. The debt arising from the order is taken to be a judgment debt.
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