How does the ATO handle Indirect Tax voluntary disclosures? Will coming forward proactively reduce penalties?
The Australian Taxation Office (ATO) recognises that sometimes businesses and individuals may not report their tax correctly, either by accident or omission. When this happens with indirect taxes, taxpayers can make a voluntary disclosure to correct their mistake.
Here’s a general overview of how the ATO handles indirect tax voluntary disclosures:
Reduced Penalties: One of the main advantages of making a voluntary disclosure is that the ATO typically reduces the penalties that might apply. By coming forward before an audit or other ATO review, taxpayers can often significantly reduce potential penalties.
Details to Provide: When making a disclosure, ensure you provide:
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- The type of tax (e.g., GST, luxury car tax, wine equalisation tax, etc.)
- Details of the mistake (periods involved, amounts, etc.)
- Why the mistake occurred (misunderstanding of law, clerical error, etc.)
- Steps taken or to be taken to prevent reoccurrence.
Timing: For reduced penalties, it’s crucial to make the disclosure:
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- Before the ATO notifies you that they will be conducting an audit or other review.
- As soon as you become aware of the mistakes.
Benefits of Voluntary Disclosure:
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- Reduction or potential elimination of administrative penalties and General Interest Charges (GIC).
- Getting ahead of any issues before they become larger problems.
- Demonstrating good compliance history and establishing a positive relationship with the ATO.
After Making a Disclosure:
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- The ATO will review the information provided.
- If necessary, they may ask for further details or clarification.
- Once the ATO has all the required information, they will tell you the outcome, including any additional tax, penalties, or interest you need to pay.
It’s essential to note that while voluntary disclosure can reduce penalties, you’ll still be liable for the tax owed and any interest charges.
If you’re considering making a voluntary disclosure, it’s advisable to seek advice from a tax professional or legal advisor to ensure you understand all potential implications and provide the ATO with the necessary information. Remember, tax law and ATO procedures might change, so always refer to the most recent guidance from the ATO or consult with a professional.
BTG can help.
BTG International has helped some of the worlds most respected companies prepare for and/or manage an Indirect Tax review. Call us on 1300 650 258, email contact@btgi.com.au or leave your details and we will be in touch.
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