INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART VII - PENALTY TAX  

SECTION 226   PENALTY TAX WHERE PART IVA APPLIES - GENERAL  

226(1)   [Additional tax]  

Where:

(a) for the purpose of making an assessment or arising out of the consideration of an objection, the Commissioner has calculated the tax that is assessable to a taxpayer in relation to a year of income;

(b) in calculating the tax assessable to the taxpayer, a determination or determinations made by the Commissioner under subsection 177F(1) was or were taken into account; and

(c) either of the following subparagraphs apply:

(i) no tax would have been assessable to the taxpayer in relation to the year of income if no determination had been made under subsection 177F(1) in relation to the taxpayer in relation to the year of income;

(ii) the amount of tax (in this section referred to as the ``amount of claimed tax'' ) that would, but for this section, have been assessable to the taxpayer in relation to the year of income if no determination had been made under subsection 177F(1) in relation to the taxpayer in relation to the year of income is less than the amount of tax referred to in paragraph (a);

the taxpayer is liable to pay, by way of penalty, additional tax equal to:

(d) in a case to which subparagraph (c)(i) applies - the penalty percentage of the amount of the tax referred to in paragraph (a); or

(e) in a case to which subparagraph (c)(ii) applies - the penalty percentage of the amount by which the amount of the tax referred to in paragraph (a) exceeds the amount of claimed tax.

226(1A)   [Additional tax where withholding tax liability exists]  

Where:

(a) the Commissioner has calculated the withholding tax that a taxpayer is liable to pay in relation to an amount; and

(b) in calculating the withholding tax, a determination or determinations made by the Commissioner under subsection 177F(2A) was or were taken into account; and

(c) either:

(i) the taxpayer would have been liable to no withholding tax in relation to the amount if no determination had been made under subsection 177F(2A) in relation to the amount; or

(ii) the amount of withholding tax (the amount of claimed tax ) for which the taxpayer would, but for this section, have been liable if no determination had been made under subsection 177F(2A) in relation to the amount is less than the amount of tax referred to in paragraph (a);

the taxpayer is liable to pay, by way of penalty, additional tax equal to:

(d) in a case to which subparagraph (c)(i) applies - the penalty percentage of the amount of the tax referred to in paragraph (a); or

(e) in a case to which subparagraph (c)(ii) applies - the penalty percentage of the amount by which the amount of the tax referred to in paragraph (a) exceeds the amount of claimed tax.

226(2)   [``penalty percentage'']  

In this section:

"penalty percentage"
means:

(a) subject to paragraph (b) - 50%; or

(b) if it is reasonably arguable that Part IVA does not apply - 25%.