Towards a fairer, simpler and more efficient tax shortfall penalty regime

摘要

AbstractThe Australian Taxation Office’s administrative tax shortfall penalty system is based on the actions of a taxpayer relevant to a tax shortfall. In the absence of the entity’s cooperation in providing documentation and evidence of intent, the determination of the facts from third party sources can be a complex and expensive process. My research has found duplication between s 284-75(3) and s 286-75(1) of the Taxation Administration Act 1953 (TAA) this could not have been the intention of the drafters of these provisions. The only explanation is that the brief prepared for the Explanatory Memorandum to Parliament for s 284-75(3) TAA, did not properly explain the distinction and full purpose of the subsection. The result being that staff engaged in compliance activities have to rely on the formal powers of s 353-10 TAA to obtain source documents from recalcitrant taxpayers. The evidence from cases cited in this thesis is that s 284-75(3) is used only to apply 75% penalty for a default assessment where there is failure to lodge a Statement, s 286-75(1) also applies a different type of penalty effectively for the same offence. This would suggest that ‘other document’ in s 284-75(3)(a) was intended to be for documents substantiating a statement to the Commissioner and not the statements covered by s 286-75(1).The aim of the Commissioner is to gain community confidence thus ensuring taxpayer compliance with tax legislation . This can sometimes be thwarted by complexities and inefficiencies in the penalty system. This study analyses the antecedents of the tax penalty domain and its current practices to make recommendations to enhance taxpayer equity, improve future compliance and make the operation of the regime simpler for all participants. The findings of this study are that a satisfactory administrative tax shortfall penalty regime should involve mutual obligations on the part of the Tax Office and taxpayers; be easy to understand; have the effect of isolating non-compliant taxpayers; and assists in the administration of penalties at lower cost.