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Taxation law is a complex, detailed and rapidly changing area of law. There are various taxation offences and penalties faced by taxpayers for failing to meet certain taxation obligations. These tax penalties include administrative penalties, late payment penalties and judicial penalties for tax offences. Professioanl and sound legal advice from a Taxation Lawyer is highly recommended if you are currently subject to a tax offence or penalty, particularly when you engage in elaborate, sophisticated schemes to minimise your taxation liability.

Firstly, there is a uniform administrative penalty regime in place which applies to all taxation laws. The broad objective of the regime is to impose penalties for particular types of behaviour that result in understatements of tax. Uniform penalties apply irrespective of the type of tax involved, provided the tax is imposed under a relevant taxation law. Specifically, it imposes penalties for failure to lodge activity statements, returns and other documents on time, making false or misleading statements or, in respect of income tax laws, taking positions in statements that are not reasonably arguable, scheme benefits, failure to make a statement required for determining a tax-related liability, and failure to meet various other tax obligations. Tax law is full intricacies and complexities and an experienced Taxation Lawyer may have regard to your taxation profile to ensure your taxation strategy is compliant with all relevant tax laws and authorities.

In some cases, the circumstances that give rise to a liability for penalties also constitute an offence. Two examples of offences which can arise in pentalites are failing to lodge a return or making false or misleading statements. If a prosecution is instituted, the person ceases to be liable to pay the administrative penalty. If a taxpayer does not pay the correct amount of tax on time, the taxpayer could be liable to pay General Interest Charges (GIC) on the tax unpaid after the due date. GIC applies not only to primary tax debts, but also to running balance account deficit debts. It is advisable to seek professional and sound legal advice from a Taxation Lawyer to ensure that you do not incur tax penalties.

The offences carry fairly substantial fines and, in some cases, a term of imprisonment. The penalties are higher for second or subsequent offences. Certain offences, if committed by an individual person, are punishable by a fine and/or imprisonment. Where such an offence is committed by a company, the maximum penalty is five times the maximum fine that could be imposed on an individual person. Where an offence is not punishable by a term of imprisonment, the proceedings take the form of proceedings for the recovery of a pecuniary penalty.

In certain circumstances, for instance where a person fails to lodge a return, the Commissioner may prosecute the offender as an alternative to imposing a penalty. However, the ATO will generally consider whether an administrative penalty is an appropriate sanction. If a person is liable to a penalty and a prosecution is instituted (based on the same offence), the person ceases to be liable to pay that penalty, even if the prosecution is later withdrawn. In such a case, any amount paid, or applied by the Commissioner, to discharge that liability for the penalty must be refunded or applied towards any other tax liability of the person.

Furthermore, this means that the proceedings are civil, rather than criminal in nature. Some tax offences are civil in nature, and this mean the offence is not punishable by a term of imprisonment and the prosecution takes the form of proceedings for recovery of a pecuniary penalty. Such proceedings may be instituted in a court of summary jurisdiction or, for more serious offences, in the relevant Supreme Court. If the prosecution has been commenced in a court of summary jurisdiction and the penalty exceeds those amounts, a person may elect to have the matter heard in the Supreme Court. If you act as an executive or manager of a company you may be liable for taxation offences committed by your companies. A consultation with a specialised Taxation Lawyer can be immensely rewarding and useful in ensuring unnecessary taxation penalties are not imposed.

There are also a variety of other offences for which a person may be prosecuted and penalties imposed, for example for breaches of the PAYG system obligations or the TFN withholding tax provisions, or for the misuse of TFNs. It is wise to seek skilled legal and financial advice from an experienced Taxation Lawyer to ensure that you comply with your taxation obligations to avoid any being charged with an offence and incurring penalties or other repercussions.

If you need further legal advice on your tax appeal matter, you may book an appointment with us by telephone (02) 9233 4048 or by email to info@navado.com.au. 

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