Taxation Ruling
IT 2292
Income tax : guidelines for the imposition and remission of penalty under sub-section 221YHK(1) for failure to furnish deduction forms under the prescribed payments system
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FOI status:
May be releasedFOI number: I 1078158PREAMBLE
An eligible paying authority, not being a government body, is liable to pay the Commissioner penalty under sub-section 221YHK(1) in circumstances where the authority refuses or fails to furnish a deduction form in accordance with sub-paragraph 221YHD(1)(b)(iv), sub-sub-paragraph 221YHD(1)(b)(v)(B), paragraph 221YHD(1E)(g) or paragraph 221YHD(1F)(f) and the paying authority is either a householder or is not required, under sub-section 221YHQ(9), to make a deduction from a prescribed payment.
2. Paragraph 221YHK(1)(c) provides that where a householder refuses or fails to furnish a deduction form and no deduction exemption certificate was in force at the time of the prescribed payment, the person is liable to pay, by way of penalty, the amount that would be required to be paid under paragraphs 221YHH(1)(a) and (b) if the person:
- (i)
- were not a householder;
- (ii)
- were required to make deductions; and
- (iii)
- had refused or failed to deduct that amount.
3. Paragraph 221YHK(1)(d) provides that where a householder fails or refuses to furnish a deduction form and a deduction exemption certificate was valid at the time of the prescribed payment, the penalty will be $50.
4. Similarly, paragraph 221YHK(1)(e) provides a penalty of $50 in any other case of failure to furnish a deduction form (i.e., cases involving eligible paying authorities other than householders).
5. This ruling provides guidelines for the exercise of the Commissioner's discretion under sub-section 221YHL(2) to remit the statutory penalties imposed by sub-section 221YHK(1). In providing these guidelines there is no intention of laying down any conditions which may restrict a Deputy Commissioner in exercising his discretion. The guidelines provided in this ruling supersede all previous guidelines issued. To the extent that earlier rulings or guidelines in relation to section 221YHK are intended to be retained, they have been incorporated in this ruling.
RULING
6. Guidelines for the imposition and remission of penalty imposed under sub-section 221YHH(1) have previously been provided in Taxation Ruling No. IT 2210. Those guidelines should be applied with equal force in respect of penalties imposed by paragraph 221YHK(1)(c).
7. The penalties provided in paragraphs 221YHK(1)(d) and (e) should, in most cases, be imposed in full. Those cases which warrant partial remission of this penalty will be determined having regard to the extenuating circumstances described in paragraph 23 of Taxation Ruling No. IT 2210. As stated in that ruling, it is not possible to specify all those situations where it is considered remission is warranted. In broad terms, however, they will be situations where, more often than not, because of a combination of circumstances rather than a single circumstance, the payer's offence is considered wholly or substantially excusable.
8. Those cases which may qualify for full remission of penalty would be those where payers or householders are affected by circumstances beyond their control. Such circumstances include flood, fire or other natural disaster, serious ill health of the person concerned where no other person was available to ensure that the deduction form was furnished as required, mail strike etc. Care must be taken to ensure that the circumstances relied on in fact prevented the householder or payer from furnishing the deduction form. In other words, the circumstances/disaster should not be viewed in isolation, but in the light of the physical ability of the householder or payer to furnish the deduction form.
9. Where the circumstances in the above paragraph have occurred, a full remission of penalty may be granted.
COMMISSIONER OF TAXATION
8 May 1986