INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART VII - PENALTY TAX  

SECTION 226P  

226P   SHORTFALL BECAUSE OF UNARGUABLE POSITION OF PARTNER  
If:

(a) a partner in a partnership ( ``defaulting partner'' ) makes a partnership taxation statement; and

(b) that statement treated an income tax law as applying in relation to a matter or identical matters in a particular way; and

(c) a taxpayer who is a partner in the partnership has a partnership shortfall excess for a year in relation to the statement; and

(d) the net income of the partnership for a year would have been reduced, or the partnership loss for that year would have been increased, because of the treatment by an amount that exceeds whichever is the higher of:

(i) $20,000; or

(ii) 2% of the net income of the partnership (if any) calculated on the basis of the partnership's return for that year; and

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

then the excess is a tax shortfall of the defaulting partner for that year to which section 226K applies.