ATO eases stance on income tax penalties

The Australian Tax Office (ATO) has changed the way penalty relief is applied to certain taxpayers as of 1 July 2018.

The Tax Office will no longer apply a penalty to tax returns and activity statements where eligible individuals and entities have made an inadvertent error by failing to take reasonable care or have not taken a reasonably arguable position.

If the ATO finds an inadvertent error, they will contact us to let you know how to get it right for next time.

Eligible individuals and entities with a turnover of less than $10 million, including small businesses, self-managed superannuation funds, strata title bodies, not-for-profits and co-operatives can access penalty relief.

The ATO will automatically apply penalty relief for those who are eligible and are under audit. It will also apply to periods under audit prior to 1 July 2018.

However, there is a reset period. Penalty relief will only be available once every three years at most. It is also not available if you have been penalised for reckless or intentional disregard of the law, evaded tax or committed fraud, or have been involved in any other tax avoidance
schemes, i.e., phoenix activity.

Important tax dates

21 July

  • Lodge and pay June 2018 monthly business activity


  • Pay Q4, 2017-18 instalment notice (form R, S or T).
  • Make SG contributions for Q4, 2017-18 to funds by this date.

31 July

  • Lodge TFN report for closely held trusts if any beneficiary
    quoted their TFN to a trustee in Q4, 2017-18.

*** This publication is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. Publication date July 2018.

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