Shortfall penalties – s 141A, 141B and 141C of the Tax Administration Act 1994

The Commissioner is seeking public feedback on the update and replacement of the existing interpretation statements on the shortfall penalties for not taking reasonable case, taking an unacceptable tax position and gross carelessness.  The existing items are still technically correct but are being updated for a number of legislative changes and new case law.  Examples have also been updated and additional examples provided.  Guidance on the “tax position” and “tax shortfall” requirements relevant to all shortfall penalties has been included in a new separate interpretation statement, as has the guidance on reductions and other matters common to all shortfall penalties.  These matters were previously discussed (in varying detail) in each of the existing interpretation statements.

Main changes to the current items include:

• the circumstances in which a taxpayer who uses a tax agent will be treated as having taken reasonable care have been prescribed in the legislation. 
• the removal of GST and withholding-type taxes from the scope of the unacceptable tax position shortfall penalty.

A reading guide with more details on the main changes is provided.

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