Voluntary disclosure penalty relief is a wide reaching administrative penalty concession that can apply where:

·      A taxpayer makes a disclosure to Commissioner of Taxation; and

·      The disclosure is made voluntarily; and

·      The disclosure may or may not identify a tax shortfall;

·      Disclosure is made prior to notification of an examination of tax affairs; or

·      Disclosure is made subsequent to notification but is reasonably estimated to have saved significant time or resources.

 

A voluntary disclosure[1] reduces the base penalty amount[2] by:

·      20% where disclosure occurs after notification of examination of a taxpayer’s tax affairs and is estimated to have saved significant time or resources; or

·      80% where taxpayer disclosure happens before notification; or

·      100% where taxpayer disclosure occurs before notification with a shortfall of up to $1,000; or

·      100% where disclosure does not result in a tax shortfall.

 

In a further inducement to engagement, the Commissioner has the discretion to treat a disclosure made after notification as if received prior to notification, meaning its always a good time to consider making a voluntary disclosure using your best manners.

 

While the tax shortfall amount remains payable in full in all cases, separate provisions apply to the remission of interest[3] but are often considered at the same time.

 

A voluntary disclosure can relate to amending an existing assessment, or filing one, where for example a taxpayer had not, but was required to.

 

Taking action is important – if you have an inkling the ATO is about to audit you or issue default assessments – get in touch and take advantage of the penalty concession.

 

Voluntary disclosure is relevant in a wide range of circumstances and an important principle for taxpayers to keep in mind when arranging their taxation affairs.