This TD, issued Wed 4.4.2012, provides the Commissioner’s view on when is a shortfall interest charge (SIC) is incurred for the purposes of para 25-5(1)(c) of the ITAA 1997.
The Determination broadly states that a SIC is incurred in the year of income the Commissioner gives taxpayers a notice of amended assessment. It says this is the case even if the SIC liability is notified separately from the notice of amended assessment or if the SIC is unpaid at the end of that year of income. [This is based on the idea that the interest charge can’t be ‘incurred’ until there is a principal amount on which the interest can accrue.]
Further, the Determination states the ATO takes the same view of when general interest charge (GIC) is incurred by a taxpayer (ie GIC is incurred when the Commissioner gives a taxpayer a notice of amended assessment).
The Determination was previously released as Draft TD 2011/D11 and is essentially unchanged from the Draft.
DATE OF EFFECT: The Determination applies both before and after its date of issue.
[LTN 65, 4/4]