The Inspector-General of Taxation’s (IGT) review of the ATO penalties brought various recommendations to the surface. This was announced by the Finance Minister Matheas Cormann in his release. Ali Noroozi, the Inspector-general of taxation, felt that various improvements could be made to the ATO penalties in order to tackle stakeholder concerns better and iron out the overall penalty process.
Inspector-General of Taxation reviews the ATO penalty guidelines
Noroozi addressed the transparency and the pragmatism (practicality) of the ATO’s penalty guidelines. Among other things, he laid emphasis on penalty remission and voluntary disclosure. Of course, here the corporate governance structure of companies also comes into the picture, the voluntary disclosure being determined at large by the ownership structure.
Administrative penalties applicable to all
Irrespective of whether we talk about individuals or companies, administrative penalties apply without prejudice to all. So if you are lodging your returns late or supplying dubious statements or applying remissions, caution is the buzzword.
Penalties are not utilised as leverage, asserts Noroozi
The Inspector-General of Taxation wants to dispel the myth that penalties are employed only as leverage. Taxpayers need to pay the penalties imposed on them once the principal dispute is addressed and resolved. There should be stress on giving in writing, the appreciation or adjustment of penalties and also forward an explanation for why the penalties could not be reduced.
Lack of evidence prime reason behind reduction of penalties
“35% penalties being reduced later on” is a stat that tells something, felt Noroozi. In particular, this is due to the ATO administrators’ inability to seek and evaluate facts and evidences behind the penalties. The Inspector-general of Taxation talked about a “penalty decision-making tool” in order to substantiate claims and justify the imposition of penalties.
How do you think the ATO will respond to the recommendations? The word being out is that they are not happy with at least one of the recommendations.