Tax Administration – shortfall penalties

Overview

During 2006 the Commissioner published two interpretation statements explaining the shortfall penalty for taking an abusive tax position (s141D) and for evasion or similar act (s 141E), IS0061 and IS0062 respectively.

These items are still technically correct. However, since their publication there have been a number of legislative changes and new case law. Consequently, the Commissioner has decided to update these interpretation statements.

The Commissioner has also decided to provide separate guidance on the threshold requirements for a shortfall penalty (that there be a “tax position” and a “tax shortfall”) and on reductions and other matters that arise when a shortfall penalty is imposed. These are issues that are common (with some exceptions) across all the different shortfall penalties. Draft items that consider these matters have been prepared and recently been through the public consultation process (PUB00500b and PUB00500c).

Similarly, interpretation statements explaining the shortfall penalty for not taking reasonable care (s 141A, IS0053), for unacceptable interpretation and unacceptable tax position (s 141B, IS0055) and for gross carelessness (s 141C, IS0060) have been updated and recently been through the public consultation process (PUB00498, PUB00499, PUB00500a respectively).

What happens next

We will acknowledge receipt of your comments immediately, and reply in more detail before the item is finalised.