The Australian Taxation Office (ATO) has heard from community and tax agents that people should have a chance to correct their mistakes when they get their tax wrong, provided there isn’t dishonest intent behind their errors, and is taking a new approach that seems to be having positive effects.
Under this new approach, if the ATO finds an error on a tax return or an activity statement during an audit or a review, the taxpayer may be eligible for automatic penalty relief. This means the ATO will show the taxpayer where they made the error, won’t apply a penalty and will educate the taxpayer on getting it right in the future.
In the first 6 months of the initiative, the ATO has assisted thousands of individuals and small businesses with errors on their tax returns or activity statements, and shortfall penalties for “failure to take reasonable care” and “not having a reasonably arguable position” have been reduced by 89.2% for individuals and 83.8% for small businesses.
Examples of use of the initiative include the following:
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