On 18 December 2024, as part of the 2024–25 Mid-Year Economic Fiscal OutlookExternal Link, the Government announced it will amend the tax law to strengthen Australia’s current tax penalty regime by:
- Ensuring tax scheme penalties apply where taxpayers are in a loss position, from 1 July 2026. This measure is not yet law.
- Penalising large taxpayers that mischaracterise or undervalue interest or dividend payments, to which withholding tax would otherwise apply, starting from 1 July 2026. This measure is not yet law.
- Extending the application of the Shortfall Interest Charge to repayments of overclaimed refundable offsets to disincentivise overclaiming, starting from the first 1 January, 1 April, 1 July or 1 October after Royal Assent of the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024.
This measure will target several gaps within the current tax penalty regime to improve tax compliance and integrity of the tax system, and to strengthen the disincentives for tax avoidance.