A public ruling, when issued, is the published view of the Commissioner of State Revenue (the Commissioner) on the particular topic to which it relates. It therefore replaces and overrides any existing private rulings, memoranda, manuals and advice provided by the Commissioner in respect of the issue(s) it addresses.
Where a change in legislation or case law (the law) affects the content of a public ruling, the change in the law overrides the public ruling—that is, the Commissioner will determine the tax liability or eligibility for a concession, grant or exemption, as the case may be, in accordance with the law.
|Circumstances in which penalty tax is imposed||Amount to which penalty tax rate of 75% is applied (the shortfall amount)|
||Primary tax4 assessed|
||Reassessed primary tax|
||Where the primary tax assessed on the last reassessment is more than the primary tax assessed on the original assessment—difference between the two amounts
Where the primary tax assessed on the last reassessment is less than the primary tax assessed on the original assessment but more than the primary tax assessed on an earlier reassessment—difference between the primary tax assessed on the last reassessment and the lowest primary tax assessed on an earlier reassessment
The taxpayer’s non-compliance with their obligations, or the need for a tax reassessment, was due to circumstances beyond their control. A taxpayer’s mere financial incapacity to pay their liability for tax does not constitute circumstances beyond their control.
The taxpayer has taken reasonable care to determine their liability for tax and meet their obligations under the tax laws, and has not intentionally disregarded or avoided the tax laws. When determining if a taxpayer took ‘reasonable care’, the Commissioner considers whether the taxpayer, in appropriate circumstances:
The above are indicative only. Meeting one or more of these criteria does not necessarily mean that reasonable care has been taken. All the circumstances resulting in a shortfall amount will be considered in determining whether reasonable care has been taken.
Where expert advice was sought, the remission under this category will only apply where the Commissioner is satisfied that all the following conditions have been met.
Examples of cases that do not involve reasonable care:
A reassessment of tax under one of the following provisions of the Duties Act in relation to an exemption or concession obtained by a taxpayer that is later excluded on a reassessment because they failed to comply with conditions but did not intentionally disregard the tax laws.13
However, where circumstances fall within both Category 1 and Category 2, Case A, the Commissioner would consider remitting penalty tax in full, as outlined for Category 1.
The taxpayer either:
For this category to apply, it is not necessary to establish that the taxpayer acted dishonestly or with intentional disregard of their tax law obligations—this is addressed in the next category. Ignorance of the tax law will suffice.
The concept of recklessness has been held to apply where ‘the person’s conduct shows disregard of, or indifference to, consequences foreseeable by a reasonable person’.14
A person has either:
Without limiting paragraph (i) above, a person may be considered to knowingly mislead the Commissioner, or cause the Commissioner to be misled, by deliberately omitting information when providing information to the Commissioner.
The concept of intentional disregard has been held to require, among other things:
… an understanding by the taxpayer of the effect of the relevant legislation or regulations, an appreciation by the taxpayer of how that legislation or regulation applies to the circumstances of the taxpayer, and finally, deliberate conduct of the taxpayer to flout the [legislation or regulations].16
Commissioner of State Revenue
Date of issue: 1 October 2020
|Public Ruling||Issued||Dates of effect|
|TAA060.2.6||1 October 2020||1 October 2020||Current|
|TAA060.2.5||9 March 2020||9 March 2020||30 September 2020|
|TAA060.2.4||1 February 2016||1 February 2016||8 March 2020|
|TAA060.2.3||30 June 2011||1 July 2011||31 January 2016|
|TAA060.2.2||3 July 2009||30 June 2009||30 June 2011|
|TAA060.2.1||24 February 2009||24 February 2009||29 June 2009|
|Supersedes Revenue Ruling TA 2.3||16 June 2008||16 June 2008||23 February 2009|
Examples of application of general remission categories and additional remission for voluntary or similar disclosures
As penalty tax is imposed under the Administration Act on primary tax payable under more than one revenue law, the examples provided below are revenue-generic. The examples refer to a taxable arrangement, a term used to refer to a transaction or event that, when effected, would give rise to a shortfall amount as defined in paragraph 3 of this public ruling.
Category 1, Case A—Circumstances beyond taxpayer’s control
Category 1, Case B—Reasonable care taken
Category 2, Case A—Reassessments of certain exemptions and concessions
Category 2, Case B—Carelessness or recklessness, with no reasonable care taken
The taxpayer claims that, at the time the taxable arrangement was entered into, they sought professional advice from a solicitor on the state tax ramifications of the arrangement. However, when requested to do so by the Commissioner, the taxpayer was unable or unwilling to produce evidence of advice having been sought.
Category 3, Case A—Deliberate tax default or intentional disregard of tax obligations
Category 3, Case B—Avoidance arrangements
Voluntary or similar disclosure examples
Voluntary disclosure before an investigation or before a prompt
Voluntary disclosure before an investigation and within 30 days of Commissioner’s prompt
Disclosure immediately after an investigation
Penalty tax guideline summary
This attachment summarises the guidelines in Attachment 1 and further remissions referred to in paragraphs 21 to 25 in this public ruling. Percentages in this table are percentages of the shortfall amounts referred to in paragraph 3 of this ruling. That is, the percentages shown in this table reflect the rate at which penalty tax is applied, after all relevant remissions have been made. The percentages shown do not take into account any increase in penalty tax to be applied under s.58(3) of the Administration Act referred to in paragraph 14.
|Category||Behaviour||Notification before notice of investigation and before prompt (%)||Notification before notice of investigation and within 30 days after prompt (%)||Notificaton before notice of investigation but more than 30 days after prompt (%)||Disclosure immediately22 after being notified of an investigation (%)||No notification, or voluntary or similar disclosure (%)|
|1||Circumstances beyond control or reasonable care taken||0||0||0||0||0|
|2||Reassessments of certain exemptions and concessions (where category 3 does not apply)||0||0||Case A—10
|3||Deliberate tax or intentional disregard or certain avoidance arrangements||0||0||15||60||75|