31 May Received a Penalty from the ATO? Read on
Received a Penalty from the ATO? Read on
Most members of the community are obligated to pay tax under various taxation laws in this country. The Tax Administration Act 1953 CTH (“Act”) is a piece of legislation that is concerned primarily with the administration of the various pieces of tax law. In order to ensure the efficient running of the tax system the Act gives the Australian Taxation Office (“ATO”) certain discretionary power to impose interest on overdue payments and penalties for defined breaches of the Act. This discretion is aimed at deterring tax payers from non-compliance of their minimum taxation obligations.
The ATO have a number of criteria which they use to determine whether or not a penalty should be imposed. They are:
- compliance history;
- the effort it took to obtain lodgement;
- the value of the information to be disclosed in the taxation document;
- whether the entity is aware of their lodgment obligation and the consequences of not meeting that obligation;
- whether the entity has had an opportunity to comply;
- the length of time the taxation document was overdue; and
- any contact the entity or their representative may have had with the ATO prior to the due date for lodgment.
Under Schedule 1 section 298-20 of the Act, the ATO have the discretion whether to remit a penalty in full or in part. In this respect the ATO have three major criteria which they use to assess any requests by the tax payer for remission of penalties, they are:
- Whether the circumstances that led to the ATO imposing a penalty were beyond the control of the tax payer.
This is quite a high bar that is set by the ATO. As an example, even in circumstances where an accountant has been at fault on your behalf, the ATO take the view that you are responsible for your tax obligations and a remission is unlikely in these circumstances.
- If it is fair and reasonable to remit the penalties in the circumstances.
This criteria is a much lower test where even though the circumstances that led to the ATO imposing a penalty were beyond the control of the tax payer it may still be fair and reasonable given the circumstances of the tax payer to remit the penalty in full or in part.
Under the Act the taxpayer has the onus of proving to the ATO that it is fair and reasonable to remit the penalties.
- If rejecting the request for remission of penalties would give rise to an unjust result.
Again, this is a lower bar to meet than the first criteria, however it remains difficult, particularly in the face of repeat offenders.
If you make an objection to the penalties and the ATO reject your objection, then you do have rights of administrative review by lodging an application with the Administrative Appeals Tribunal (“AAT”). The AAT have broad ranging powers to look at all the evidence it sees fit in making a determination of whether the ATO made the correct decision or should have made it differently. It should be noted the Act places the onus of proving the ATO’s decision was incorrect or should have been made differently back on the tax payer in these situations.
A lawyer can and often does get involved in representing tax payers at the AAT. In the event you are not content with the AAT’s ruling you may appeal your case to the Federal Court.
Should you require assistance with your litigation matter, please give us a call for a free assessment. Our contact details are:
Berrigan Doube Lawyers
Melbourne: (03) 9600 2577
Sydney: (02) 9251 6699
Brisbane: (07) 3229 0707