Senate

Replacement Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P)

Chapter 12 Penalties for Late Payment of Tax and Related Penalties

Clauses 33, 34 and 35 of the Bill will reduce from 20% per annum to 16% per annum the rate at which additional tax is payable as a penalty for not paying various taxes on time and for related matters.

The penalty rate is being reduced for:

Income Tax Assessment Act 1936 - [Clauses 33, 34 and 35]:

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late payment of income tax, franking deficit tax, provisional tax, company tax payments and certain other amounts [ss.207 and 160 ARW(2) - clause 34];

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late payment of withholding taxes [ss.128C(3), 221YN(4), 221ZC(4) and 221ZD(1) - clause 34];

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late payment of, or failure to deduct:

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PAYE deductions [ss.221EAA, 221F(12) and 221G(4A) - clause 34];

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prescribed payment deductions [ss.221YHH, 221YHJ, 221YHZC(3) and 221YHZD(2) - clause 34];

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deductions from amounts withdrawn from film accounts [ss.221ZO and 221ZP - clause 34];

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non-payment of provisional tax or initial payment of company tax because of incorrect estimates by the taxpayer or because of avoidance arrangements [ss.1221AY(2) and (3), 221AZE(3) and 221YDB - clauses 33 and 35] . This category includes incorrect estimates of provisional tax where the present penalty of 20% flat is being reduced to 16% flat [clause 35].

Fringe Benefits Tax Assessment Act 1986 - [Clause 33]

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late payment of fringe benefits tax (s. 93);

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non-payment of fringe benefits tax because of an incorrect estimate (s.112(4)).

Sales Tax Assessment Act (No. 1) 1930 Sales Tax Assessment Act 1992 - [Clause 33]

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late payment of sales tax (s. 29(1) of the Sales Tax Assessment Act (No. 1) 1930 and s.68(1) of the Sales Tax Assessment Act 1992).

Commencement

For the amendments being made by Clauses 33 and 34 the reduced rate of penalty is to apply in respect of any period during which the relevant amount is overdue that occurs on or after 1 October 1992. In the case of the amendment being made by Clause 35, the reduced rate is to apply to incorrect provisional tax estimates for the 1992-93 year of income and subsequent years of income.