Taxation Administration Act 1953

An entity must not engage in conduct that results in that or another entity being a *promoter of a *tax exploitation scheme.

An entity must not engage in conduct that results in a *scheme that is materially different from that described in a *public ruling, *private ruling or *oral ruling being promoted on the basis of conformity with that ruling.

An entity must not engage in conduct that results in a *scheme that has been promoted on the basis of conformity with a *public ruling, *private ruling or *oral ruling (whether or not the ruling actually relates to the scheme) being implemented in a way that is materially different from that described in the ruling.

A scheme will not have been implemented in a way that is materially different from that described in a ruling if the tax outcome for participants in the scheme is the same as that described in the ruling.

For the purposes of subsections (1A) and (2), disregard:

subsection 82KZMGA(1A) of the Income Tax Assessment Act 1936; and

subsection 394‑10(5A) of the Income Tax Assessment Act 1997.

Those 2 subsections relate to forestry managed investment schemes.

The effect of this subsection is that a scheme will have been implemented in a way that is materially different from that described in a ruling if the tax outcome for participants in the scheme is the same as that described in the ruling only because of the operation of the subsections mentioned in paragraphs (a) and (b).

If the Federal Court of Australia is satisfied, on application by the Commissioner, that an entity has contravened subsection (1), (1A) or (2), the Court may order the entity to pay a civil penalty to the Commonwealth.

If the entity is a registered tax agent or BAS agent, being penalised under this subsection may affect the continued registration of the entity: see section 20‑45 and Subdivision 40‑A of the Tax Agent Services Act 2009.

The maximum amount of the penalty for a contravention by an entity is the greater of:

5,000 penalty units; and

3 times the total value of all benefits received or receivable (directly or indirectly) by the entity and *associates of the entity in respect of the *scheme.

See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Despite subsection (4), the maximum amount of the penalty for a contravention by an entity that is a body corporate is the greatest of the following:

50,000 penalty units;

3 times the total value of all benefits received or receivable (directly or indirectly) by the entity and *associates of the entity in respect of the *scheme;

either:

10% of the *aggregated turnover of the entity for the most recent income year to end before the entity contravened, or began to contravene, the provision; or

if the amount worked out under subparagraph (i) is greater than an amount equal to 2.5 million penalty units—2.5 million penalty units.

See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Despite subsections (4) and (4A), the maximum amount of the penalty for a contravention by an entity that is:

a partner in a partnership that is a *significant global entity; or

a trustee of a trust that is a significant global entity;

50,000 penalty units;

3 times the total value of all benefits received or receivable (directly or indirectly) by the significant global entity and *associates of the significant global entity in respect of the *scheme;

either:

10% of the *aggregated turnover of the significant global entity for the most recent income year to end before the entity contravened, or began to contravene, the provision; or

if the amount worked out under subparagraph (i) is greater than an amount equal to 2.5 million penalty units—2.5 million penalty units.

See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

In deciding what penalty is appropriate for a contravention of subsection (1), (1A) or (2) by an entity, the Federal Court of Australia may have regard to all matters it considers relevant, including:

the amount of the benefit received or receivable (directly or indirectly) by the entity and *associates of the entity in respect of the *scheme; and

the deterrent effect that any penalty may have; and

the amount of loss or damage incurred by scheme participants; and

the nature and extent of the contravention; and

the circumstances in which the contravention took place, including the deliberateness of the entity’s conduct and whether there was an honest and reasonable mistake of law; and

the period over which the conduct extended; and

whether the entity took any steps to avoid the contravention; and

whether the entity has previously been found by the Court to have engaged in the same or similar conduct; and

the degree of the entity’s cooperation with the Commissioner.

The penalty is a civil debt payable to the Commonwealth, and the Commissioner may, on behalf of the Commonwealth, enforce an order for an entity to pay the penalty as if it were an order made in civil proceedings against the entity to recover a debt due by the entity. The debt arising from the order is taken to be a judgment debt.