In the recent case of Waldeck, an employee was subject to an administrative penalty because the taxpayer had claimed Pay As You Go amounts which had not been withheld by the employer.

Ordinarily, taxpayers can claim a credit equal to the total amount withheld by the employer for the relevant income year. However, as mentioned above, if the employer did not actually withhold that amount, the employee is liable to an administrative penalty for making a false or misleading statement to the Commissioner.

So if a taxpayer makes a false or misleading statement that results in a shortfall amount, they may be liable for an administrative penalty equal to 25% of the shortfall amount if the shortfall resulted from a lack of reasonable care.

However, if the taxpayer can demonstrate that there are mitigating circumstances which show that the taxpayer should be dealt with more leniently, the penalty may be remitted in part or full.

For example, no penalty is likely to eventuate if the taxpayer made an honest and genuine attempt to comply with the law.

As another example, as occurred in Waldeck, if the taxpayer can demonstrate that they received the wrong advice on the ATO helpline (and hence would have dealt with the matter differently had the advice been correct or different), this may also be a reason to waive or remit any penalty imposed.

Here at The Quinn Group, our experienced team of tax accounts, tax agents and tax lawyers are able to assist you with all your taxation needs. Submit an online enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment today.

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