The revenue authorities drive to ensure that Significant Global Entities (“SGE”) meet lodgement requirements has been escalated by the introduction of recent legislation into Parliament to correct an unintended consequence in the law.
The legislation which has been introduced into Parliament, impacts subsidiary members of a tax consolidated or Multiple Entry Groups of SGE’s. The proposed change to the legislation will result in the subsidiary members of the groups becoming liable for Failure to Lodge (“FTL”) penalties. The legislation has retrospective effect with its scheduled application to have effect from 5 December 2019.
The changes are focused on penalties for late or non-lodgement of forms (ie returns, notice, statement or other document). The FTL penalty ranges are as follows:
|Days Late||FTL Penalty for SGE|
|28 or less||$105,000|
|29 to 56||$210,000|
|57 to 84||$315,000|
|85 to 112||$420,000|
|More than 112||$525,000|
Examples of the forms that the FTL penalties can apply to are as follows:
- Income Tax Return
- Activity Statements (business and instalments)
- Cbc Statements
- FBT returns
- Annual GST returns and information statements
- General Purpose Financial Statements
- Taxable payments summary annual reports
- PAYG payment summary annual reports
- Single Touch Payroll Reports
These changes mean that every aspect of a group’s interaction with the ATO need to be closely monitored to ensure they are lodged on time every time. Where there is a possibility that a form will be lodged late, an extension request should be made beforehand. The timing of internal processes facilitating the completion of the relevant forms may need to be refined to ensure that the timelines can be met on an ongoing basis.
It should be noted that the ATO automatically generate FTL penalties and therefore taxpayers are then required to try and seek remittance. The approach is clearly designed to drive behaviour given the quantum of the penalties. If you have any outstanding forms, these should be actioned as a matter of priority.
If you have any questions in relation to the above or need any assistance in relation to actioning lodgement of outstanding forms or extension requests, please contact your engagement partner on 02 9283 1666.