The good news for taxpayers for 2010 is where a taxpayers uses the services of a registered tax agent they will be given a ‘safe harbour’ (or exemption) from penalties even if their tax return is later discovered to have contained an error or if the tax return is lodged late.
The ‘safe harbour’ rule can only apply for returns lodged on or after 1 March 2010.
The importance of triggering the ‘safe harbour’ provisions, should the need arise, is for you to ensure that you provide all of the relevant tax information in your possession when you meet with us. This includes any computer ledgers, loans, summary of particular expenses incurred, records, or documents substantiating your position that we request from you plus any other information you think may be relevant to the preparation of your tax return. The information provided must be complete and accurate.
It is also important that you provide us with this information by the time it is requested so as to allow the return to be lodged by its due date.
Furthermore, the safe harbour from late lodgment penalties can also apply where a BAS, IAS, or FBT return is lodged late.
Application of safe harbor to penalties & interest
The safe harbour can apply to exempt the penalty for an error made in a tax return, however the tax and interest will be still be payable.
Not Eligible for safe harbour
Even if you are not eligible for the safe harbour, it may be possible to write to the ATO to remit or reduce the penalty, at their discretion, and for that decision to be reviewed by the Administrative Appeals Tribunal if the request is denied.