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Penalty relief for taxpayers

From 1 July 2018, the Tax Office is advising Australians that if they find an error in their tax return or activity statement they will not incur a penalty but will advise of the error and how to get it right next time.

Penalty relief will only apply to eligible taxpayers or entities (i.e., turnover of less than $10 million) every three years.

These may include:
– Small businesses
– Co-operatives
– Self-managed super funds (SMSFs)
– Not-for-profit organisations

Eligible individuals will only be given penalty relief on their tax return or activity statement if they make an inadvertent error because they either:
– took a position on income tax that is not reasonably arguable, or
– failed to take reasonable care

The ATO will not provide penalty relief when individuals have (in the past three years):
Received penalty relief
– Avoided tax payment or committed fraud
– Accrued taxation debts with no intention of being able to pay (i.e., phoenix activity)
– Previously penalised for reckless or intentional disregard of the law
– Participated in the management or control of another entity which has evaded tax.

Individuals can not apply for penalty relief. The ATO is reminding individuals that they will provide relief during an audit should it apply.

Penalty relief will not be applied to:
– Wealthy individuals and their businesses
– Associates of wealthy individuals (that may be deemed a small business entity in their own right)
– Public groups, significant global entities and associates

Penalty relief will also not be applied to certain taxes, i.e., fringe benefits tax (FBT) or super guarantee (SG).

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News

Updates to the unclaimed superannuation money protocol

January 15, 2020

The Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA), more commonly known as the unclaimed superannuation money protocol, has been updated recently to provide a clearer structure going forward.

SUMLMA provides guidance on in relation to unclaimed money, lost member accounts, superannuation accounts of former temporary residents and their associated reporting and payment obligations. The update has now added content on inactive low balance accounts.

The act now clearly defines what is an inactive low-balance account, how statements and payments work, the registering of lost members and various rules for special cases.

It is important to note that the information in the protocol does not apply to super providers that are trustees of a state or territory public sector super scheme, in which:

The protocol provides administrative guidance only and should not be taken as a replacement for the law or technical reporting specifications.