If you run a small business and are found by the ATO to have made unintentional record-keeping mistakes, you could be liable to an administrative penalty. However, this could soon change under new proposed laws to give ATO the power to issue a direction to complete an approved record-keeping education course instead of imposing financial penalties. Legislation to implement this measure has been introduced into Parliament but has not yet passed. Due to the upcoming Federal Election and limited sitting days, there’s uncertainty about the passage of this measure.
This proposed change originated as part of the Black Economic Taskforce’s final report, which found that tax-related record-keeping obligations should be more straightforward for businesses. The ATO should have a range of administrative sanctions available at its discretion for those who breach the rules.
The tax-records education direction will not be available to those businesses that deliberately avoid record-keeping obligations. In those cases, financial penalties will be applied, and if there is evidence of serious non-compliance, criminal sanctions may also be considered by the ATO.
Businesses that fail to comply with a tax-records written education direction either by not completing the course or not completing the system by the set date will be liable for the original administrative penalty. It should be noted that since some record-keeping obligations under fringe benefits tax and substantiation provisions do not give rise to administrative liability, the Commissioner will not be able to issue an education direction in those cases.
Similarly, a tax-records education direction will not be issued to an entity that has failed to comply with its record-keeping obligations under the Super Guarantee Act. This is dealt with separately and covered by the super guarantee education direction. The main difference being failure to comply with a super guarantee education direction is an absolute liability offence. It results in an administrative liability of 5 penalty units, whereas failure to comply with tax-records education direction attracts no additional penalty.
If you would like to keep up-to-date with all the latest developments in the tax space, we can help to ensure your business doesn’t miss a single opportunity. With the Federal Budget coming up, it is more important than ever to stay on top of new measures that could benefit your business.
**The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.