In September 2016, the ATO released a Consultation Paper (‘Proposed changes to penalties for small business and individuals’) that sought feedback regarding its proposal to provide one chance before applying a penalty to eligible small businesses and individuals for:
- False and misleading statements for failure to take reasonable care; and
- Failure to lodge on time
The ‘one chance’ approach is proposed to apply to the first error and late lodgement subject to penalty, although the one chance timeframe is to be refreshed after a set period.
The ATO will confirm in writing to these small business and individual clients that, while they were liable to a penalty, a penalty will not apply on that occasion.
Not surprisingly, the feedback was positive to the proposals:
- The majority of feedback received by the ATO supported a one chance approach, although some respondents were concerned about how out would work in practice.
- Overwhelmingly, respondents suggested a reset period should apply, with the most common response for a reset period being two years.
- Some agents suggested that some clients should be excluded, such as those with a poor compliance history, high wealth clients who fail to take reasonable care, and businesses with the same director who have had previous offences.
- Most respondents agreed that a one chance approach would positively increase the perception of fairness of the system.
Ref: ATO website: Proposed changes to penalties for small business and individuals – consultation.