Complance and Penalty Rules
2007 amendments to the compliance and penalties rules following the discussion document Tax penalties, tax agents and disclosures.
The compliance and penalties rules in the Tax Administration Act 1994 came into effect on 1 April 1997. They were designed to promote effective and fairer enforcement of the Inland Revenue Acts by providing better incentives for taxpayers to comply voluntarily with their tax obligations.
The discussion document, Tax penalties, tax agents and disclosures, was released in October 2006. The discussion document examined the current compliance and penalty rules, and identified several areas where the rules could be clearer, more consistent and better targeted to encourage voluntary compliance. It discussed options for the relaxation of penalties when taxpayers have genuinely and consistently tried to do the right thing. The discussion document also proposed that, in future, before recognising a person as a "tax agent" the Commissioner must be satisfied that doing so is consistent with the protection of the integrity of the tax system.
The following amendments result from the proposals outlined in the discussion document.
The definition of "Tax Agent"
Late filing penalties
Late filing penalties for GST returns
Late payment penalty notification
Tax advisors and the shrotfall penalty for not taking reasonable care
Refining the scope of the inacceptable tax position shortfall penalty
Abusive tax position shortfall penalty threshhold
Late payment of employer monthly schedule amounts
Penalty reductions for voluntary disclosures
Due date for payment of tax
Tax compliance initiatives - limited amnesties