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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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Trustee reporting obligations checklist

November 8, 2018

Trustees must comply with reporting obligations to avoid penalties from the ATO.

The following trustee reporting checklist to make sure you are stress-free at tax-time.

Trustees must: