Practice Statement PS LA 2014/4 was released on Wed 17.12.2014. It deals with administration of the penalty imposed under s 284-75(3) of Sch 1 to the Taxation Administration Act 1953. It explains: (i) the circumstances in which an entity becomes liable to a subsection 284-75(3) penalty, and (ii) how the penalty is assessed, including remission.
Subdivision 284-B imposes penalties relating to statements. An entity is liable to an administrative penalty under subs 284-75(3) (the penalty) where:
- it fails to lodge a return, notice or other document by the due date for lodgment, and
- the return, notice or other document is necessary for the Commissioner to accurately determine a tax related liability of the entity, and
- the Commissioner determines the tax related liability without the assistance of that document.
The Practice Statement applies to penalty decisions for ‘failure to provide a document’ penalty, imposed pursuant to subs 284-75(3), including decisions relating to objections against the assessment of this penalty, made on or after the date of issue.
It provides guidelines on how the Commissioner’s discretion in subs 298-20(1) to remit the penalty may be exercised. The ATO says there is no intention to lay down conditions that may restrict the exercise of the discretion. Nor does the Practice Statement represent a general exercise of the Commissioner’s discretion. Rather, the ATO says the guidelines are provided to:
- help ATO staff in the exercise of the discretion, and
- ensure that entities in like situations receive like treatment.
The administration of the penalty involves 3 steps:
Step 1 – Establish if the entity is liable to the penalty.
Step 2 – Assess the penalty.
Step 3 – Notify the entity of its liability to pay the penalty amount and the reasons why it is liable to pay the penalty.
The ATO says the Commissioner is not required to give written notice of the decision and the reasons for the decision to the entity where the penalty has been remitted in full.
The Practice Statement says ATO staff must undertake each of these steps in the order in which they appear above. For example, assessment of the penalty cannot take place until the entity’s liability to the penalty has been established. Each step is discussed in detail in the Practice Statement.
DATE OF EFFECT: 26 June 2014.
[FJM Note: This 75% of shortfall penalty is savage (the same as the ‘intentional disregard of the law’ penalty) and there ought to be generous remission guidance.]
[LTN 244, 17/12/14]