INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 11 - Additional tax by way of penalty  

SECTION 160ARZD   PENALTY TAX BECAUSE OF POSITION TAKEN  

160ARZD(1)   [Taxpayer's liability]  

Subject to this Division, if:

(a) a company has a franking tax shortfall for a franking year or a refund; and

(b) the shortfall or part of it was caused by the company, in a taxation statement, treating a franking tax law as applying in relation to a matter or identical matters in a particular way; and

(c) the shortfall or part, as the case may be, so caused exceeded whichever is the higher of:

(i) $10,000; or

(ii) 1% of whichever of the following is applicable:

(A) if the shortfall is a class A franking tax shortfall - the class A franking deficit tax that would have been payable by the company for that year if the tax were assessed on the basis of the company's return under subsection 160ARE(1) or 160ARF (1) in relation to that year;

(B) if the shortfall is a class B franking tax shortfall - the class B franking deficit tax that would have been payable by the company for that year if the tax were assessed on the basis of the company's return under subsection 160ARE(1) or 160ARF (1) in relation to that year;

(BA) if the shortfall is a class C franking tax shortfall - the class C franking deficit tax that would have been payable by the company for that year if the tax were assessed on the basis of the company's return under subsection 160ARE(1) or 160ARF (1) in relation to that year;

(BB) if the shortfall is a venture capital franking tax shortfall - the venture capital deficit tax that would have been payable by the company for that year if the tax were assessed on the basis of the company's return under subsection 160ARE(1) or 160ARF (1) in relation to that year;

(C) if the shortfall is a class A deficit deferral tax shortfall - the class A deficit deferral tax that would have been payable by the company in relation to that refund if the tax were assessed on the basis of the company's return under section 160AREA in relation to that refund;

(D) if the shortfall is a class B deficit deferral tax shortfall - the class B deficit deferral tax that would have been payable by the company in relation to that refund if the tax were assessed on the basis of the company's return under section 160AREA in relation to that refund;

(E) if the shortfall is a class C deficit deferral tax shortfall - the class C deficit deferral tax that would have been payable by the company in relation to that refund if the tax were assessed on the basis of the company's return under section 160AREA in relation to that refund; and

(d) when the statement was made, it was not reasonably arguable that the way in which the application of the law was treated was correct;

the company is liable to pay, by way of penalty, additional tax equal to 25% of the amount of the shortfall or part.

160ARZD(2)   [Regard to relevant authorities]  

For the purposes of this section, the correctness of the treatment of the application of a law in relation to a matter is reasonably arguable if, having regard to the relevant authorities and the matter, it would be concluded that what is argued for is about as likely as not correct.

160ARZD(3)   [Assumption of Commissioner's exercise of discretion]  

For the purposes of this section, if the treatment of the application of a law assumed that the Commissioner would exercise a discretion in a particular way, the correctness of the treatment is reasonably arguable, in so far as it consisted of the assumption, if the exercise by the Commissioner of the discretion in that way would be reasonably arguably in accordance with law.

160ARZD(4)   [Court's decision]  

For the purposes of this section, the exercise, or assumed exercise, by the Commissioner of a discretion is reasonably arguably in accordance with law if, having regard to the relevant authorities and the matter in relation to which the discretion is or would be exercised, it would be concluded that a court would be about as likely as not to hold that the exercise is or would be in accordance with law.

160ARZD(5)   [Definitions]  

In this section:

"authority"
includes:

(a) a franking tax law; or

(b) material for the purposes of subsection 15AB(1) of the Acts Interpretation Act 1901 ; or

(c) a decision of a court (whether or not an Australian court), the Tribunal or a Board of Review; or

(d) a public ruling within the meaning of Part IVAAA of the Taxation Administration Act 1953 ;

"return franking tax"

160ARZD(6)   [Commissioner's exercise of discretion]  

For the purposes of this section, the Commissioner exercises a discretion if the Commissioner:

(a) forms an opinion; or

(b) refuses or fails to form an opinion; or

(c) attains a state of mind; or

(d) refuses or fails to attain a state of mind; or

(e) makes a determination; or

(f) refuses or fails to make a determination; or

(g) exercises a power; or

(h) refuses or fails to exercise a power.