Taxation Laws Amendment (Self Assessment) Act 1992 (101 of 1992)
PART 3 AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936
31 After section 226
After section 226 of the Principal Act the following sections are inserted:
Certain penalty tax under scheme sections not payable because of application for private ruling
"226A. If:
(a) apart from this section, a taxpayer would be liable to pay additional tax under a scheme section in respect of a year of income; and
(b) the wrongful behaviour provision applied only because the taxpayer treated an income tax law as applying to the taxpayer in respect of the year in relation to an arrangement in a particular way; and
(c) when or before the taxpayer's return for the year was lodged, there was an application for a private ruling on the way in which that law would apply to the taxpayer in respect of the year in relation to the arrangement; and
(d) in the opinion of the Commissioner, the application was one that the Commissioner is required to comply with; and
(e) when the treatment of the law happened, the private ruling had not been made;
the taxpayer is not liable to pay the additional tax.
Certain penalty tax under scheme sections not payable because of advice etc.
"226B. If:
(a) apart from this section, a taxpayer would be liable to pay additional tax under a scheme section in respect of a year of income; and
(b) the wrongful behaviour provision applied only because the taxpayer treated an income tax law as applying in a particular way; and
(c) that way agrees with:
(i) advice given to the taxpayer by a taxation officer; or
(ii) a general administrative practice under this Act; the taxpayer is not liable to pay the additional tax.
Further penalty tax - scheme sections
"226C. If:
(a) a taxpayer is liable to pay additional tax under a scheme section; and
(b) one or both of the following applies:
(i) the taxpayer took steps to prevent or hinder the Commissioner from becoming aware that the wrongful behaviour provision applied;
(ii) the taxpayer was liable to pay additional tax under any of those sections in respect of an earlier year of income;
the taxpayer is liable to pay, by way of penalty, further additional tax equal to 20% of the amount of the additional tax.
Reduction of penalty tax under scheme sections - disclosure after tax audit notified
"226D. If:
(a) a taxpayer is liable to pay additional tax under a scheme section in respect of a year of income; and
(b) after the Commissioner had informed the taxpayer that a tax audit relating to the taxpayer in respect of the year was to be carried out, the taxpayer voluntarily told the Commissioner, in writing, about the matter because of which the wrongful behaviour provision applies;
the amount of the additional tax is reduced by 20%.
Reduction of penalty tax under scheme sections - disclosure before tax audit notified
"226E. If:
(a) a taxpayer is liable to pay additional tax under a scheme section in respect of a year of income; and
(b) before the Commissioner had informed the taxpayer that a tax audit relating to the taxpayer in respect of the year was to be carried out, the taxpayer voluntarily told the Commissioner, in writing, about the matter because of which the wrongful behaviour provision applies;
the amount of the additional tax is reduced by 80%.
When disclosure about scheme sections made
"226F. If a taxpayer voluntarily tells the Commissioner, in writing, about a matter because of which a wrongful behaviour provision applies for a year after the Commissioner has informed the taxpayer that a tax audit in relation to the taxpayer in respect of that year is to be carried out, the Commissioner may, if the Commissioner considers it appropriate in all the circumstances, determine that, for the purposes of sections 226D and 226E, the taxpayer is taken to have told the Commissioner before being informed.
Penalty tax where shortfall caused by lack of reasonable care
"226G. Subject to this Part, if:
(a) a taxpayer has a tax shortfall for a year; and
(b) the shortfall or part of it was caused by the failure of the taxpayer or of a registered tax agent to take reasonable care to comply with this Act or the regulations;
the taxpayer is liable to pay, by way of penalty, additional tax equal to 25% of the amount of the shortfall or part.
Penalty tax where shortfall caused by recklessness
"226H. Subject to this Part, if:
(a) a taxpayer has a tax shortfall for a year; and
(b) the shortfall or part of it was caused by the recklessness of the taxpayer or of a registered tax agent with regard to the correct operation of this Act or the regulations;
the taxpayer is liable to pay, by way of penalty, additional tax equal to 50% of the amount of the shortfall or part.
Penalty tax where shortfall caused by intentional disregard of law
"226J. Subject to this Part, if:
(a) a taxpayer has a tax shortfall for a year; and
(b) the shortfall or part of it was caused by the intentional disregard by the taxpayer or by a registered tax agent of this Act or the regulations;
the taxpayer is liable to pay, by way of penalty, additional tax equal to 75% of the amount of the shortfall or part.
Penalty tax where unarguable position taken
"226K. Subject to this Part, if:
(a) a taxpayer has a tax shortfall for a year; and
(b) the shortfall or part of it was caused by the taxpayer, in a taxation statement, treating an income 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 the taxpayer's return tax for that year; 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 taxpayer is liable to pay, by way of penalty, additional tax equal to 25% of the amount of the shortfall or part.
Penalty tax where unarguable position taken about scheme
"226L. Subject to this Part, if:
(a) a taxpayer has a tax shortfall for a year; and
(b) the shortfall or part of it was caused by the taxpayer in a taxation statement treating an income tax law as applying in relation to a scheme in a particular way; and
(c) the scheme was a tax avoidance scheme within the meaning of subsection 224(1); and
(d) none of the scheme sections applies in relation to the scheme; the taxpayer is liable to pay, by way of penalty, additional tax equal to:
(e) if, when the statement was made, it was reasonably arguable that the way in which the application of the law was treated was correct - 25% of the amount of the shortfall or part; or
(f) in any other case - 50% of the amount of the shortfall or part.
Penalty because private ruling disregarded
"226M.(1) Subject to this Part, if:
(a) a taxpayer has a tax shortfall for a year; and
(b) a private ruling was made on the way in which an income tax law applies to the taxpayer in respect of the year in relation to an arrangement; and
(c) the shortfall or part of it was caused by the taxpayer, in a taxation statement made after the private ruling was made, treating that law as applying to the taxpayer in respect of the year in relation to the arrangement in a different way;
the taxpayer is liable to pay, by way of penalty, additional tax equal to 25% of the amount of the shortfall or part.
"(2) Subsection (1) does not apply if there is an order of a court, or a decision of the Tribunal, that applies to the private ruling.
Shortfall because of statement by partner
"226N. If:
(a) a partner in a partnership ('defaulting partner') makes a partnership taxation statement; and
(b) a taxpayer who is a partner in the partnership has a partnership shortfall excess for a year in relation to the statement; then:
(c) the excess is a tax shortfall of the defaulting partner for that year; and
(d) if the statement was caused by behaviour described in section 226G, 226H or 226J, the shortfall is taken to have been caused by that behaviour.
Shortfall because of unarguable position of partner
"226P. 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.
Penalty tax because of unarguable position of partner about scheme
"226Q. 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 scheme 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 scheme was a tax avoidance scheme within the meaning of section 224; then:
(e) the excess is a tax shortfall of the defaulting partner for that year to which section 226L applies; and
(f) for the purposes of section 226L the statement referred to in paragraph 226L(e) is taken to be the statement referred to in paragraph (a).
Shortfall because of statement by trustee
"226R.(1) If:
(a) a trustee of a trust estate makes an estate taxation statement; and
(b) a taxpayer who is or has been a beneficiary of the estate has an estate shortfall excess for a year in relation to the statement; then:
(c) the excess is a tax shortfall of the trustee for that year; and
(d) if the statement was caused by behaviour described in section 226G, 226H or 226J, the shortfall is taken to have been caused by that behaviour.
"(2) Subsection (1) does not mean that a reference in this Part to a taxpayer does not include a reference to a taxpayer in the capacity of a trustee.
Shortfall because of unarguable position of trustee
"226S.(1) If:
(a) a trustee of a trust estate makes an estate 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 or has been a beneficiary of the estate has an estate shortfall excess for a year in relation to the statement; and
(d) the net income of the estate for a year would have been reduced, or a loss of the estate 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 estate (if any) calculated on the basis of the estate'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 trustee for that year to which section 226K applies.
"(2) Subsection (1) does not mean that a reference in this Part to a taxpayer does not include a reference to a taxpayer in the capacity of a trustee.
Penalty tax because of unarguable position of trustee about scheme
"226T.(1) If:
(a) a trustee of a trust estate makes an estate taxation statement; and
(b) that statement treated an income tax law as applying in relation to a scheme in a particular way; and
(c) a taxpayer who is or has been a beneficiary of the estate has an estate shortfall excess for a year in relation to the statement; and
(d) the scheme was a tax avoidance scheme within the meaning of section 224; then:
(e) the excess is a tax shortfall of the trustee for that year to which section 226L applies; and
(f) for the purposes of section 226L the statement referred to in paragraph 226L(e) is taken to be the statement referred to in paragraph (a).
"(2) Subsection (1) does not mean that a reference in this Part to a taxpayer does not include a reference to a taxpayer in the capacity of a trustee.
Certain amounts not shortfall because of application for private ruling
"226U. If:
(a) apart from this section, a taxpayer has a tax shortfall for a year of income; and
(b) the shortfall or part of it was caused by the taxpayer, in a taxation statement, treating an income tax law as applying to the taxpayer in respect of the year in relation to an arrangement in a particular way; and
(c) when or before the statement was made, there was an application for a private ruling on the way in which that law would apply to the taxpayer in respect of the year in relation to the arrangement; and
(d) in the opinion of the Commissioner, the application was one that the Commissioner is required to comply with; and
(e) when the statement was made, the private ruling had not been made; the shortfall is not a tax shortfall, or the part is not part of a tax shortfall, for the purposes of section 226G, 226H, 226J, 226K or 226L.
Certain amounts not shortfall because of advice etc.
"226V. If:
(a) apart from this section, a taxpayer has a tax shortfall for a year of income; and
(b) the shortfall or part of it was caused by the taxpayer, in a taxation statement, treating an income tax law as applying in a particular way; and
(c) that way agrees with:
(i) advice given to the taxpayer by a taxation officer; or
(ii) a general administrative practice under this Act;
the shortfall is not a tax shortfall, or the part is not part of a tax shortfall, for the purposes of section 226G, 226H, 226J, 226K or 226L.
Where 2 or more shortfall sections apply
"226W. If 2 or more shortfall sections apply to all or a particular part of a taxpayer's tax shortfall, the taxpayer is liable to pay the additional tax under only one of those sections, not being a section the additional tax under which is lower than it would be under another of those sections.
Further penalty tax
"226X. If:
(a) under a shortfall section, a taxpayer is liable to pay additional tax because of a tax shortfall or part of a tax shortfall; and
(b) one or more of the following applies:
(i) the taxpayer took steps to prevent or hinder the Commissioner from becoming aware of the shortfall or part;
(ii) if the shortfall or part was caused otherwise than by the taxpayer in a taxation statement treating an income tax law as applying to the taxpayer in relation to a matter or scheme in a particular way - the taxpayer became aware of the shortfall or part after a taxation statement by the taxpayer that was taken into account in working out the taxpayer's statement tax for the year and failed to tell the Commissioner about it, in writing, within a reasonable time of becoming so aware;
(iii) if the additional tax is payable under section 226G, 226H or 226J - the taxpayer was liable to pay additional tax under any of those sections in respect of an earlier year of income;
(iv) if the additional tax is payable because the taxpayer, in a taxation statement, treated a law as applying in relation to a matter or scheme in a particular way so that section 226K or 226L applied - the taxpayer was liable to pay additional tax under that section in respect of an earlier year of income in respect of which the taxpayer treated that law as applying in relation to that matter or a similar matter or that scheme or a similar scheme in that way;
the taxpayer is liable to pay, by way of penalty, further additional tax equal to 20% of the amount of the additional tax.
Reduction of penalty tax - disclosure after tax audit notified
"226Y. If:
(a) under a shortfall section a taxpayer is liable to pay additional tax in respect of a year of income because of a tax shortfall or part of a tax shortfall; and
(b) after the Commissioner had informed the taxpayer that a tax audit relating to the taxpayer in respect of the year was to be carried out, the taxpayer voluntarily told the Commissioner, in writing, about the shortfall or part; and
(c) telling the Commissioner could reasonably be estimated to have saved the Commissioner a significant amount of time or significant resources in the audit;
the amount of the additional tax is reduced by 20%.
Reduction of penalty tax - disclosure before tax audit notified
"226Z. If:
(a) under a shortfall section, a taxpayer is liable to pay additional tax in respect of a year of income because of a tax shortfall or part of a tax shortfall; and
(b) before the Commissioner had informed the taxpayer that a tax audit relating to the taxpayer in respect of the year was to be carried out, the taxpayer voluntarily told the Commissioner, in writing, about the shortfall or part;
the amount of the additional tax because of the shortfall or part is reduced:
(c) if the shortfall or part is at least $1,000 - by 80%; or
(d) if the shortfall or part is less than $1,000 - to nil.
When disclosure made
"226ZA. If a taxpayer voluntarily tells the Commissioner, in writing, about a tax shortfall, or part of a tax shortfall, for a year after the Commissioner has informed the taxpayer that a tax audit in relation to the taxpayer in respect of that year is to be carried out, the Commissioner may, if the Commissioner considers it appropriate in all the circumstances, determine that, for the purposes of sections 226Y and 226Z, the taxpayer is taken to have told the Commissioner before being informed.
Minimum amount of additional tax
"226ZB. If, apart from this section, an amount of additional tax, being an amount less than $20, is payable by a person under this Part, then, by force of this section, the amount of the additional tax is $20.".