Tax Laws Amendment (Improvements to Self Assessment) Act (No. 1) 2005 (75 of 2005)
Schedule 1 Shortfall interest charge
Part 1 Shortfall interest charge
Taxation Administration Act 1953
1 Before Division 284 in Schedule 1
Insert:
Division 280 - Shortfall interest charge
Table of Subdivisions
Guide to Division 280
280-A Object of Division
280-B Shortfall interest charge
280-C Remitting shortfall interest charge
Guide to Division 280
280-1 Guide to Division 280
The shortfall interest charge applies to shortfalls of income tax that are revealed when the Commissioner amends your assessment.
The charge is applied at a uniform rate that is lower than the general interest charge rate.
The Commissioner has a discretion to remit shortfall interest charge.
Subdivision 280-A - Object of Division
Table of sections
280-50 Object of Division
280-50 Object of Division
The object of this Division is to neutralise benefits that taxpayers could otherwise receive from shortfalls of income tax, so that they do not receive an advantage in the form of a free loan over those who assess correctly.
Subdivision 280-B - Shortfall interest charge
Table of sections
280-100 Liability to shortfall interest charge
280-105 Amount of shortfall interest charge
280-110 Notification by Commissioner
280-100 Liability to shortfall interest charge
(1) You are liable to pay *shortfall interest charge on an additional amount of income tax that you are liable to pay because the Commissioner amends your assessment for an income year.
(2) The liability is for each day in the period:
(a) beginning at the start of the day on which income tax under your first assessment for that income year was due to be paid, or would have been due to be paid if there had been any; and
(b) ending at the end of the day before the day on which the Commissioner gave you notice of the amended assessment.
(3) However, if an amended assessment reinstates all or part of a liability in relation to a particular that had been reduced by an earlier amended assessment, the period for the reinstated liability begins at the start of the day on which income tax under the earlier amended assessment was due to be paid, or would have been due to be paid if there had been any.
Note: See section 204 of the Income Tax Assessment Act 1936 for when the amount of income tax and shortfall interest charge becomes due and payable. That section also provides for general interest charge on any part of the additional amount (plus any shortfall interest charge) that remains unpaid after the additional amount is due and payable.
(4) Your liability to pay *shortfall interest charge exists whether or not you are liable to any penalty under this Act.
(5) Neither the Commonwealth nor an authority of the Commonwealth is liable to pay *shortfall interest charge.
280-105 Amount of shortfall interest charge
(1) The *shortfall interest charge for a day is worked out by multiplying the rate worked out under subsection (2) for that day by the sum of these amounts:
(a) the additional amount of income tax; and
(b) the shortfall interest charge on that amount from previous days.
(2) The rate is:
(*Base interest rate for the dat + 3 percentage points) / Number of days in the calendar year
280-110 Notification by Commissioner
(1) The Commissioner must give you a notice stating the amount of the *shortfall interest charge you are liable to pay for the period applicable under section 280-100.
(2) The notice may be included in any other notice given to you by the Commissioner.
(3) A notice given by the Commissioner under this section is prima facie evidence of the matters stated in the notice.
Subdivision 280-C - Remitting shortfall interest charge
Table of sections
280-160 Remitting shortfall interest charge
280-165 Commissioner must give reasons for not remitting in certain cases
280-170 Objecting against remission decision
280-160 Remitting shortfall interest charge
(1) The Commissioner may remit all or a part of an amount of *shortfall interest charge you are liable to pay if the Commissioner considers it fair and reasonable to do so.
(2) Without limiting subsection (1), in deciding whether to remit, the Commissioner must have regard to:
(a) the principle that remission should not occur just because the benefit you received from the temporary use of the shortfall amount is less than the *shortfall interest charge; and
(b) the principle that remission should occur where the circumstances justify the Commonwealth bearing part or all of the cost of delayed payments.
280-165 Commissioner must give reasons for not remitting in certain cases
The Commissioner must give you a written statement of the reasons for a decision not to remit an amount of *shortfall interest charge you are liable to pay if you requested the Commissioner, in the *approved form, to remit the amount.
Note: Section 25D of the Acts Interpretation Act 1901 sets out rules about the contents of a statement of reasons.
280-170 Objecting against remission decision
You may object, in the manner set out in Part IVC, against a decision of the Commissioner not to remit an amount of *shortfall interest charge you are liable to pay on an additional amount of income tax if the amount of the charge that was not remitted is more than 20% of the additional amount of income tax.