Law Administration Practice Statement PS LA 2011/2
Administering penalties for failing to electronically notify or pay goods and services tax or pay as you go liabilities
Date of issue: 14 April 2011
Date of effect: 14 April 2011
Draft: False
Withdrawn: False

1. What this Practice Statement is about: Electronic lodgment and payment by large entities makes Australia's tax system more responsive, efficient and consistent by better matching tax collections with the economic conditions faced by traders. Therefore, penalties apply to large entities when they do not lodge a range of goods and services (GST) and pay as you go (PAYG) notices and payments electronically. This Practice Statement provides guidance on: • how the non-electronic notification (NEN) and the non-electronic payment (NEP) penalties apply • when and how to exercise our discretion to remit these penalties, and • the taxpayer's review rights when we decide not to remit. • how the non-electronic notification (NEN) and the non-electronic payment (NEP) penalties apply • when and how to exercise our discretion to remit these penalties, and • the taxpayer's review rights when we decide not to remit. All legislative references in this Practice Statement are to Schedule 1 to the Taxation Administration Act 1953 (TAA), unless otherwise indicated. | 2. When electronic notification and electronic payment is required: The following entities (relevant entities) must notify and pay electronically: • any entity with a GST turnover of $20 million or more [1] • any entity with a base assessment instalment amount [2] of $20 million or more [3] • any entity that is participating in the deferred GST scheme [4] , and • any entity classed as a 'large withholder' under the PAYG withholding system. [5] • any entity with a GST turnover of $20 million or more [1] • any entity with a base assessment instalment amount [2] of $20 million or more [3] • any entity that is participating in the deferred GST scheme [4] , and • any entity classed as a 'large withholder' under the PAYG withholding system. [5] Any entity that chooses or is required to lodge its GST return [6] electronically must also notify all other business activity statement (BAS) amounts due on the same day. [7] An entity with a GST turnover below $20 million may choose to lodge its GST return electronically. [8] If an entity chooses to do this, it must also electronically notify all other BAS amounts that are due on the same day. However, an entity is only liable to a penalty if it is required to lodge or pay electronically or both and does not do so. | 3. When the NEN and the NEP penalties are imposed: A NEN penalty applies each time a relevant entity makes a non-electronic: • lodgment of a GST return [9] • notification of monthly PAYG instalment, even when the amount is nil [10] , or • notification of another BAS amount. [11] • lodgment of a GST return [9] • notification of monthly PAYG instalment, even when the amount is nil [10] , or • notification of another BAS amount. [11] A NEP penalty is imposed each time a relevant entity makes a non-electronic payment of an assessed net amount for: • a tax period [12] • a debt [13] • a withheld amount [14] , or • an instalment. [15] • a tax period [12] • a debt [13] • a withheld amount [14] , or • an instalment. [15] | 4. How the NEN and the NEP penalties are applied: We must notify an entity in writing if a penalty applies and give reasons. [16] The penalties are calculated as follows: • a NEN penalty of 5 penalty units [17] where an entity has made the lodgment or notification in another way [18] • a NEP penalty of 5 penalty units where an entity has made the payment in another way. [19] • a NEN penalty of 5 penalty units [17] where an entity has made the lodgment or notification in another way [18] • a NEP penalty of 5 penalty units where an entity has made the payment in another way. [19] The penalty is due and payable on the date specified in the notice, which must be at least 14 days after the notice is given to the entity. [20] The general interest charge applies to any unpaid penalty from the due date for payment of that penalty. [21] | 5. When to remit the NEN and the NEP penalties: We can exercise our discretion to remit some or all of the NEN or the NEP penalty or both when it is fair and reasonable to do so, with or without a request from the taxpayer. [22] While our discretion to remit is unfettered, when deciding whether to remit a penalty, you should consider the following: • the facts and circumstances relevant to the taxpayer's case, including what they (or their registered agent) have provided to us, and • the principles of natural justice and those outlined in Our Charter , including that we - be fair and reasonable, and - treat clients as being honest and give them an opportunity to explain any discrepancies. • the facts and circumstances relevant to the taxpayer's case, including what they (or their registered agent) have provided to us, and • the principles of natural justice and those outlined in Our Charter , including that we - be fair and reasonable, and - treat clients as being honest and give them an opportunity to explain any discrepancies. - be fair and reasonable, and - treat clients as being honest and give them an opportunity to explain any discrepancies. Compliance with tax obligations other than the electronic notification and payment obligation is relevant to considering whether to remit the penalties. While it is not possible to identify every circumstance where it would be fair and reasonable to remit the NEN or the NEP penalty, we will usually remit where the entity can show that: • they did not have access to the appropriate infrastructure to lodge or pay electronically • access to the appropriate telecommunication infrastructure was prohibitively expensive • there was a telecommunications fault that could not be repaired in time • they were affected by a natural disaster (such as flood, fire, drought, earthquake or state of emergency) • they were affected by another disaster which had significant impact on the entity or the region where it or its branches operate • a key staff member responsible for electronically notifying or paying for the entity was seriously ill and there was no other person that could have notified or paid electronically • the entity has taken steps to ensure electronic payment or notification will occur in future, but those arrangements were not yet available at the time of this payment or notification, or • there was ATO action resulting in the delay of the electronic lodgment and payment. • they did not have access to the appropriate infrastructure to lodge or pay electronically • access to the appropriate telecommunication infrastructure was prohibitively expensive • there was a telecommunications fault that could not be repaired in time • they were affected by a natural disaster (such as flood, fire, drought, earthquake or state of emergency) • they were affected by another disaster which had significant impact on the entity or the region where it or its branches operate • a key staff member responsible for electronically notifying or paying for the entity was seriously ill and there was no other person that could have notified or paid electronically • the entity has taken steps to ensure electronic payment or notification will occur in future, but those arrangements were not yet available at the time of this payment or notification, or • there was ATO action resulting in the delay of the electronic lodgment and payment. Generally, we would not exercise the discretion to remit the NEN or the NEP penalty when: • a deliberate act or omission of the entity resulted in non-electronic lodgment or payment • the entity chose not to set up systems for electronic lodgment or payment and has not taken subsequent steps to set up such systems, or • the entity did not have the cash flow to enable electronic lodgment or payment and did not seek an extension of time to lodge or pay. • a deliberate act or omission of the entity resulted in non-electronic lodgment or payment • the entity chose not to set up systems for electronic lodgment or payment and has not taken subsequent steps to set up such systems, or • the entity did not have the cash flow to enable electronic lodgment or payment and did not seek an extension of time to lodge or pay. When we decide to not remit or partially remit the NEN or the NEP penalty, we must give the entity a written notice with reasons for the decision. [23] It is not necessary to notify the entity or to record the penalties on the entity's tax account where the penalties were remitted in full. | 6. Exemption from electronic lodgment for GST returns: An entity with a GST turnover of $20 million or more may not be required to lodge electronically if the Commissioner of Taxation 'otherwise approves'. [24] We generally expect large entities to have the facilities required to comply with electronic lodgment and payment requirements. However, we may approve an exemption from the electronic lodgment requirement for a GST return (and, consequently, the other BAS amounts due on the same day) if the telecommunication infrastructure is: • inadequate where the taxpayer is conducting the accounting work for these liabilities, or • prohibitively expensive to the entity. • inadequate where the taxpayer is conducting the accounting work for these liabilities, or • prohibitively expensive to the entity. | 7. Objection and appeal rights: If we do not fully remit a penalty and the amount that remains payable is more than 2 penalty units, the taxpayer may object to our decision. [25] If they object and are dissatisfied with the objection decision, they may either apply to the Administrative Review Tribunal (ART) or to the Federal Court for a review of the objection decision. The ART is a less complex and costly option. If the entity is dissatisfied with the ART decision, they may appeal to the Federal Court. If the remaining penalty is 2 units or less, the taxpayer cannot object to our decision not to remit, however, they may seek a review of the decision under the Administrative Decisions (Judicial Review) Act 1977 in the Federal Circuit Court or the Federal Court. Under Our Charter, we must include review rights in our correspondence when advising a taxpayer of a decision which is subject to review rights. | 8. Privacy: We must comply with the Privacy Act 1988 and the requirements of the Australian Privacy Principles and the Privacy (Tax File Number) Rule 2015 when collecting or handling personal information relating to penalty remission. | 9. More information: For more information, see: • ATO privacy policy • Australian Privacy Principles • Privacy (Tax File Number) Rule 2015 • Law Administration Practice Statement PS LA 2011/15 Lodgment obligations, due dates and deferrals • Our Charter • ATO privacy policy • Australian Privacy Principles • Privacy (Tax File Number) Rule 2015 • Law Administration Practice Statement PS LA 2011/15 Lodgment obligations, due dates and deferrals • Our Charter

Related practice statements: PS LA 2011/15
Legislative references: ANTS(GST)A 1999 31-25(1) | ANTS(GST)A 1999 31-25(2) | ANTS(GST)A 1999 31-25(4) | ANTS(GST)A 1999 33-10(2) | ANTS(GST)A 1999 195-1 | ANTS(GST)R 2019 33-15.01A(a) | ANTS(GST)R 2019 33-15.01B(2) | TAA 1953 8AAZMA | TAA 1953 8AAZMA(2) | TAA 1953 Sch 1 16-85(1) | TAA 1953 Sch 1 16-95(1) | TAA 1953 Sch 1 45-20(2A) | TAA 1953 Sch 1 45-72 | TAA 1953 Sch 1 45-320(2) | TAA 1953 Sch 1 288-10 | TAA 1953 Sch 1 288-20 | TAA 1953 Sch 1 298-10 | TAA 1953 Sch 1 298-15 | TAA 1953 Sch 1 298-20 | TAA 1953 Sch 1 298-20(1) | TAA 1953 Sch 1 298-20(2) | TAA 1953 Sch 1 298-20(3) | TAA 1953 Sch 1 298-25 | TAA 1953 Sch 1 388-80 | Administrative Decisions (Judicial Review) Act 1977 | Crimes Act 1914 4AA | Privacy Act 1988 | Privacy (Tax File Number) Rule 2015
Other references: ATO privacy policy Australian Privacy Principles Our Charter Penalties

Additional content:
Updated in line with current ATO style and accessibility requirements. | Update the footnote to include missing hyperlink. | Rewrite into the new style and format. | Paragraphs 2, 5, 11 and 12 | Updated to reflect a legislative amendment to section 288 10 to Schedule 1 of the TAA to include monthly PAYG instalment payers. | Updated to promote consistency on remission of penalties. | Insert new paragraph 34 to reflect amendments to the Privacy Act 1988 . | Include reference to Privacy Act 1988 . | New paragraph to advise that penalty arises separately for each activity statement. | New paragraph to advise that penalty does not apply to entities that are not under legal obligation to lodge electronically but choose to do so. | Removed reference to example of using compliance history as a factor in remission consideration as per trend in PS LA 2012/5. | Removed example in 4th dot point of factors to consider when remitting penalty, as the example has been misconstrued by clients. | Revised general structure to enhance the readability of the LAPS. | [1] Subsections 31-25(2), (4) and 33-10(2) of the A New Tax System ( Goods and Services Tax ) Act 1999 (GST Act). | [2] Your base assessment instalment amount is the amount of your assessable income that the Commissioner determines is instalment income for the base year (subsection 45-320(2)). | [3] Subsection 45-20(2A) and section 45-72. | [4] Paragraph 33-15.01A(a) and subsection 33-15.01B(2) of the A New Tax System ( Goods and Services Tax ) Regulations 2019 . | [5] Subsection 8AAZMA(2) of the TAA and the definition in subsection 16-95(1). | [6] 'GST return' is defined in section 195-1 of the GST Act. | [8] Subsection 31-25(1) of the GST Act. | [9] Subsection 31-25(2) of the GST Act. | [10] Subsection 45-20(2A). | [12] Note 1 to subsection 33-10(2) of the GST Act. | [13] Section 8AAZMA of the TAA. | [14] Subsection 16-85(1). | [17] The value of a penalty unit is contained in section 4AA of the Crimes Act 1914 and is indexed regularly. The dollar amount of a penalty unit is available at Penalties . | [22] Subsection 298-20(1). | [23] Subsection 298-20(2). | [24] Subsection 31-25(2) of the GST Act. | [25] Subsection 298-20(3). | File 1-5AHLM0M; 1-1417KAXG; 1-14JJDFD1